Indian exporters are closely monitoring developments in the United States after the US Senate passed a bill that could impose tariffs of up to 100% on countries continuing to purchase Russian crude oil. The proposed legislation, known as the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, has raised significant concerns within India's export sector.
The bill, which passed the Senate on August 7, 2026, grants the US President the authority to levy substantial tariffs on the five largest buyers of Russian oil and gas, 30 days after the law takes effect. This comes at a time when Indian exports are already subject to a 10% ad valorem duty from the US related to forced labor allegations, alongside a previous 25% punitive tariff specifically for Russian crude purchases.
Potential Impact on Indian Trade
India has emerged as the second-largest buyer of Russian crude, with Russia supplying 30.3% of India’s crude imports in fiscal year 2026, valued at $40.8 billion. This reliance has helped India manage energy costs and control inflation domestically. However, the new US bill threatens to significantly increase the cost of these imports through potential tariffs.
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), expressed the industry's apprehension.
“It is not a good development and exporters are concerned. But we are awaiting how the Act is finally implemented,” Sahai stated.
Strategic Implications and Diplomatic Avenues
Experts suggest that the proposed tariffs could serve as leverage for the US in ongoing bilateral trade negotiations with India. There is also hope within Indian circles that the US might grant an exemption to India, considering its increasing energy imports from the United States. In FY26, India's crude imports from the US rose to $9.1 billion from $6.6 billion in FY25, with total US energy purchases reaching $12.5 billion.
A recent report by the Global Trade Research Initiative (GTRI) highlighted that while the bill authorizes tariffs, it does not automatically impose a 100% duty. Section 113 of the act directs the President to impose additional tariffs of up to 100%. GTRI also argued that Washington cannot credibly claim India is shutting out American energy, given the substantial increase in US energy imports by India.
Next Steps for the Legislation
The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 now returns to the House of Representatives. When the House reconvenes on August 31, it will have the option to approve, amend, or reject the bill. The outcome will be crucial for Indian exporters and the broader trade relationship between India and the United States.