A significant reduction in Russian crude imports could substantially boost India’s oil bill and inflation, experts warn as geopolitical and trade tensions escalate.
India could face a materially higher oil import bill if purchases of Russian crude are cut sharply, with economist Santosh Mehrotra warning that a 50 per cent reduction could add $5bn-$10bn a year to costs and nudge inflation higher. His comments come as Washington weighs punitive tariffs on countries that keep buying Russian oil, putting New Delhi in the middle of a fraught trade-off between energy security and external pressure.
Mehrotra said Russia has become a major supplier for India and that discounted crude from Moscow has helped contain import costs. He argued that any forced reduction would not only lift the oil bill, but could also feed through into prices more broadly if the government tried to shield consumers from higher petrol and diesel costs.
The wider macroeconomic risk, according to Mehrotra, is that India’s current account deficit would widen and growth could come under additional strain. He pointed out that India has kept its current account gap relatively contained in recent years, but said a sharp drop in Russian inflows would make that position harder to defend, particularly if global crude prices rise at the same time because less Russian oil reaches the market.
That concern is echoed in policy analysis from the Centre for Strategic and International Studies and the Observer Research Foundation, both of which have argued that India’s sudden shift towards Russian crude has created a difficult balancing act. Their assessments suggest that while the price advantage has been attractive, it has also increased India’s exposure to geopolitical pressure and made diversification more urgent over time.
Trade expert Ajay Srivastava of the Global Trade Research Initiative said India should avoid hasty decisions made only to placate the US and instead widen its export and energy options. He argued that New Delhi needs a longer-term sourcing strategy, while Vandana Bharati of SMC Global Securities advised a wait-and-watch approach, saying the policy response should reflect how US tariff threats evolve. Both stressed that energy and food security remain central, even as India explores other trade relationships with the European Union, the Middle East and elsewhere.
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