The diplomatic and economic communities in the capital of India are overheating with the introduction of a bipartisan bill, Sanctioning Russia Act of 2025 that formally threatens 500% tariffs on the exports of India to the US unless the Delhi government shuts down the discounted Russian oil imports. The legislation, which targets India, China and Brazil, and at minimum, as indicated by Senator Lindsey Graham on January 7, 2026, receiving the green light of President Trump, is aimed at maintaining the war economy of Moscow by purchasing its energy. India has been able to trade bilaterally worth $200 billion annually, and this is the most serious US economic test it has had since the 2019 GE scuffle.
Bill Provisions and Escalators.
The Act was authored by Graham (R-SC) and Richard Blumenthal (D-CT), and it requires punitive tariffs of 500 percent and above on goods, services, and financial flows of the countries that are materially supporting the energy industry of Russia after the invasion of Ukraine. Presidential waivers are present, yet Graham underlined the presence of tremendous leverage to make things happen. India: India (1.8 million barrels/day, 35 percent of seaborne Russian crude, 50 billion dollars/year) turns out to be the first target as it will save 15 billion dollars in terms of discounts.
This intensifies the 25 percent steel/textile tariffs proposed by Trump on August 2025 on Russian purchases, which India challenged through WTO. Clothing, drugs, gems/jewellery ($120billion US exports) are now being wiped out.
| Sector | US Exports (Bn) | Tariff Effect | (Job Risk) (Lakh) |
| Textiles/Apparel | 15 | +500% | 5-7 |
| Pharmaceuticals | 10 | +500% | 2-3 |
| Gems & Jewelry | 8 | +500% | 3-4 |
| IT Services (Indirect) | 50 | Secondary taxes | 1-2 |
Multi-pronged Response of Delhi.
The restraint as calculated by MEA: Spokesperson Randhir Jaiswal has taken the stance of watchful optimism and said: Energy security is of the first order; constructive engagement with Washington. Ambassador Vinay Kwatra won an emergency appointment at Capitol Hill; PM Modi-Trump call will be made after the State of Union. There was a 10% q4 2025 Russian imports decline under pressure signal.
Diversification speed-up: Reliance/ONGC Guyana, Namibia dealings; GAIL grows Qatar/Australia LNG (25MMT objective). The domestic refining capacity is increased to 250MMT in 2028. FICCI calls on rupee-roule settlement to avoid SWIFT risks.
Domestic politics: “Congress shouted new abnormal in relationships- Jairam Ramesh threatens daily Trump trials. BJP retorted: Congress undependency, BJP diversifies; Soviet nostalgia. Dilip Shanghvi, the industry captains of Sun Pharma, indicated the expansion of its plants in the US.
Projections of the Economic Fallout.
Short term bloodshed: FICCI approximates 1.25 lakh crore loss in exports Year 1; rupee goes down to 88/$. Tirupur/Surat textile centers are threatened with 7 lakh redundancies; pharma centres (Hyderabad, Ahmedabad) eviscerate 20 per cent incomes. BSE Sensex lost 800 points January 8.
Recalibration on a long-term basis: India speeds up China+1 production of US brands; Vietnam/Indonesia benefit. Strategic petroleum reserves are already at 10MT; electric vehicle push can replace crude.
Fiscal arithmetic: Russian discount loss of 15B vs. US export loss of 30B net negative, but not disabling, through forex (700B reserves). RBI alludes to 50bps reduction on the repo rate in case the rupee crosses 87.
Realignment of Chessboard of the World.
China compares: Beijing (40% Russian oil) insures against $200B tariff tsunami; possible energy bloc on yuan. Petrobras in the US shale hedges Brazil. Russia directs to Venezuela, India loses 20B market.
Quad tensions: Strategic convergence is tested by tariff war, Delhi is looking at AUKUS as a counter to tech sharing. WTO challenge probable, but Article 21 national security clause by Trump evades.
The ultimatum by Graham: “India has to either make a choice between the discounts of Putin or the American markets. The pragmatism of energy versus the Quad solidarity-strategic autonomy collides with economic reality.
Company Crises and Stock Market Responses.
Pharma pivot: Dr. Reddys/Sun declare doubling capacity in the US; API localization picks up pace. Textile lobby wants PLI continuance (₹10,000 crore request). In line with the fear of secondary sanctions, IT majors look at Ireland/Dubai money transfer routes.
Investor confidence: FIIs withdrawals pull 2B; DIIs take in through SIPs flows. Gold imports spike 30% as hedge.
With the looming votes in Capitol Hill, Delhi is going to be directly facing the protectionism of Trump 2.0. The American market access is Russian oil pragmatism, India finds the way out with typical strategic forbearance.
