US Treasury Secretary Scott Bessent has hinted that the 25% extra tariffs on India could be scrapped following a reduction in Indian imports of crude oil from Russia. “We put 25% tariffs on India for buying Russian oil. And Indian purchases by their refineries of Russian oil have collapsed. So this is a success. The 25% Russian oil tariffs are still on. I would imagine that there is a path to take them off,” he said Friday, in an interview to US-based news outlet Politico at Davos.

Pressure Tactics or Market Reality?
Commenting on oil-related tariffs, he took a dig at the “virtue signalling European allies” who did not exert similar pressure on India “because they wanted to sign this big trade deal with India”. The conclusion of the India-European Union Free Trade Agreement (FTA) could be announced as early as January 27, while progress on the India-US Bilateral Trade Agreement (BTA) remains stalled. Officials, however, maintain that the deal with the US too is close, with even President Donald Trump stating on Wednesday that the two countries are “going to have a good deal”.

With the 25% oil-related tariffs and another 25% for addressing trade deficit, India has the highest tariffs amongst all US trade partners. This is pressuring Indian exporters in some key sectors, even though overall exports to the US are still higher than last year in the April-December period.

Before the Ukraine invasion, approximately 2-3% of Indian oil that went into their refineries came from Russia. The oil was sanctioned. It got deeply discounted and moved into the high teens…Huge profits for the refiners. But in the ultimate act of irony and stupidity, guess who was buying the refined products from Indian refineries made from Russian oil — the Europeans. They are financing the war against themselves,” Bessant said in the interview.

Tale of Two Agreements
While Europe has avoided direct confrontation with the Indian government, restricting to only verbal criticism of India for buying Russian oil, it recently moved to block re-export of Russian-origin products from India into European markets. The EU ban on refined Russian products takes effect from January. It, however, sanctioned the Vadinar Refinery in Gujarat, owned by Nayara Energy, largely because Russian state firm Rosneft owns a nearly 50% stake in it.

Major Indian refiners have reportedly begun segregating their operations — stopping the use of Russian crude in sections of their refineries that specifically produce fuel for export to Europe to ensure compliance.

India’s oil imports from Russia in December were lowest in the past two years at 25% of the total, from 35-40% in mid-2025.
Source: Financial Express