NEW DELHI – Prime Minister Narendra Modi’s plan to push India into the league of global economic powers, much like China, is running into new problems. Tensions with the United States are rising due to India’s ongoing purchases of Russian oil.
The US, led by President Donald Trump, has accused India of making money from cheap Russian crude while war continues in Ukraine, hurting ties between the two countries.
Modi’s refusal to back away from Russian oil, along with recent setbacks in repairing relations with China’s Xi Jinping, shows just how limited India’s influence can be internationally, bringing up doubts about the future of its big economic plans.
The US has slapped a heavy 50% tariff on goods from India, doubling its earlier 25% rate, after India refused to stop buying Russian oil. President Trump has openly called out India, saying its oil deals with Russia help pay for the Ukraine war.
In a recent post, Trump argued, “India is buying massive amounts of Russian oil, then selling it for big profits. They aren’t bothered by the suffering in Ukraine.”
Once the war began in 2022, India’s Russian oil imports jumped. Western sanctions and a G7 cap set Russian prices at $60 a barrel, making them far cheaper for India. By 2024, Russia supplied around 37% of India’s imported oil, up from almost none in 2021.
This move has saved India about $3.8 billion each year. Still, these savings look small next to the $87 billion in annual exports to the US, now threatened by higher tariffs.
Indian leaders have pushed back, saying the US and Europe also still buy Russian energy, just not as much as before.
India’s Ministry of External Affairs pointed out that the US continues to import Russian uranium imports and the EU imported 16.5 million tonnes of Russian LNG in 2024. Modi has stressed the need for cheap energy for India’s 1.4 billion people, describing the decision as one based on national interest.
Looking Beyond Russian Oil
India could switch suppliers since the global oil market remains well stocked. Traditional partners like Saudi Arabia and Iraq, as well as Nigeria and the US, can increase their supply.
State-run companies such as Indian Oil Corp and Bharat Petroleum Corp have started ordering spot consignments from these countries. India is expected to rework long-term deals, especially with Saudi Aramco, by March 2026 to secure more oil.
Moving away from Russian oil is not easy. Discounts from Russia, while smaller than before, are still attractive, and stopping imports suddenly could harm long-standing ties with Moscow, which go beyond oil into defence and trade.
At home, Modi faces pressure from his own BJP and opposition leaders, making it risky to give in to US demands.
To increase India’s position on the world stage, Modi tried to rebuild relations with Xi Jinping at the BRICS summit in Kazan, Russia, in October 2024— their first top-level meeting in five years.
The goal was to restart direct flights and improve economic ties. Instead, the outcome has disappointed many, as China did not offer much, and Modi now faces criticism at home for being too friendly with a rival.
Modi’s approach to China came partly as a response to US pressure. Yet, China, careful about its Russian oil imports, is unlikely to buy any extra quantities India may want to redirect. This leaves India with little help as it stands apart from the US.
There will be another opportunity for Modi and Xi to meet at the Shanghai Cooperation Organization summit in Tianjin, but experts do not expect major changes.
India’s Power Plays Are Limited
Unlike China, which dominates key resources and manufacturing, India does not hold strong cards in talks with either the US or China. Analysts say India’s economy relies heavily on US trade and investment, especially in sectors like technology and pharmaceuticals, both vulnerable to new tariffs from Trump.
Modi’s response has been to double down on “Make in India” and push for local manufacturing, ideas that play well at home but may not offset losses from US tariffs. The Congress party, now in opposition, says Modi has mismanaged the relationship with Trump, once seen as a dependable ally, and failed to protect the national interest.
Over the years, the US has been a far more dependable partner for India than China. Washington has worked with New Delhi on defence, technology, and trade, viewing India as a counterbalance to Beijing in Asia. By contrast, India’s ties with China have long been tense, marked by border clashes and economic rivalry.
Trump’s first term featured several high-profile meetings with Modi, and their warm relationship led to promises of even closer ties. But new trade disputes and Trump’s outreach to Pakistan (India’s longstanding rival) have strained the partnership.
What’s Next for India’s Economy?
Modi’s refusal to back down from Trump’s demands carries high stakes. A 50% tariff could hit India’s refineries and key export businesses, slowing growth. Some experts believe a drawn-out trade fight with the US could cost India important points off its GDP, making it harder to reach the target of a $5 trillion economy by 2027.
Backing down to the US might weaken Modi at home and put India’s neutral foreign policy at risk, a big part of its identity on the world stage. Modi’s recent call with Russian President Putin, renewing their “Special and Privileged Strategic Partnership,” shows a clear intention to stick with Moscow, even as it risks upsetting the US.
Where India goes from here depends on delicate talks and careful choices. Any progress in US-Russia discussions over Ukraine could ease things for India. In the meantime, India needs to balance its energy needs and trade priorities without losing key friends. For now, Modi’s ambition to see India as a global economic force faces stiff tests from a shifting and unpredictable world.
