U.S. Sanctions Bill Raises Tariff Threat and India's Energy Security Concerns

The brief in 6 cards

1. Context1 / 6

   The U.S. Congress has passed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. It seeks to increase economic pressure on Russia over the Ukraine war and provides for tariffs of up to 100% on major purchasers of Russian energy. The legislation has cleared both chambers but awaits presidential approval. India faces potential exposure because it relies heavily on imported crude oil and Russia is a major supplier.

2. Key highlights2 / 6

   Congressional approval: The Bill has passed both houses of the U.S. Congress. Presidential approval and subsequent implementation remain pending. Reuters

   Tariff threat: The legislation provides for duties of up to 100% on goods imported into the U.S. from countries meeting specified Russian-energy purchasing or sanctions-evasion criteria. It does not automatically impose a 100% tariff on India.

   Import dependence: India meets over 88% of its crude oil requirements through imports, making it vulnerable to international supply disruptions and price fluctuations.

   Russian oil supplies: India imported 110.4 lakh tonnes of Russian crude in July 2026, accounting for more than half of its crude imports that month, according to the reported commerce ministry data.

   Economic implications: Disruption to Russian oil supplies during the West Asian energy crisis could increase procurement costs. The tariff threat could also affect Indian exporters and ongoing bilateral trade negotiations.

   Waiver provisions: The Bill allows exemptions under specified conditions. The U.S. administration retains discretion over tariff rates and certain implementation decisions, subject to statutory requirements.

3. Key concepts3 / 6
   1. Primary and secondary sanctions

   Primary sanctions restrict dealings with a directly targeted country, organisation or individual. For example, a government may prohibit its own businesses from conducting specified transactions with a sanctioned entity. 2.

   Secondary sanctions extend pressure to outside parties that continue certain dealings with the original target. They aim to influence behaviour beyond the sanctioning country's immediate jurisdiction.

   Connection to the news: The U.S. legislation combines measures directed at Russia with potential penalties for other countries involved in Russian energy trade. The proposed duties on those countries' exports to the U.S. are specifically secondary tariffs. Every CRS Report

   2. Tariffs and trade restrictions

   A tariff is a tax imposed on imported goods. It raises the cost of bringing foreign products into a country's market and can affect their competitiveness.

   A tariff differs from a direct prohibition on trade. It increases the cost of imports rather than necessarily stopping transactions.

   Connection to the news: The proposed secondary tariffs would apply to goods entering the U.S. from targeted countries, not simply to Russian oil purchased by India. Thus, Indian exporters could face higher duties because of India's energy purchases.

   3. Sanctions waiver

   A waiver is an exemption that permits certain activities or removes specified restrictions even when a sanctions framework otherwise applies.

   Waivers may be subject to conditions, such as certification that an exemption serves the sanctioning country's national interests. A waiver does not necessarily mean that the underlying sanctions legislation has been repealed.

   Connection to the news: The U.S. Bill contains a national-interest waiver mechanism requiring presidential certification and a report to Congress. India could seek an exemption through diplomatic discussions, but approval is not guaranteed. Every CRS Report

   4. Energy security, diversification and strategic petroleum reserves

   Energy security means ensuring that energy remains reliably available at affordable prices. A country dependent on imported oil can face difficulties when war, sanctions or transport disruptions affect its suppliers.

   Energy diversification involves purchasing energy from different countries and using different sources of energy. This reduces dependence on a particular supplier or fuel.

   A Strategic Petroleum Reserve (SPR) is an emergency stock of crude oil that can be used when regular supplies are disrupted. It provides a temporary buffer but cannot permanently replace normal imports.

   Connection to the news: India's reliance on imported crude, together with its substantial Russian purchases, highlights the importance of alternative suppliers, transport arrangements and emergency reserves.

4. Way forward4 / 6

   India's policy options include negotiating exemptions and transition periods while reviewing alternative oil suppliers, emergency reserves and shipping arrangements. Such decisions involve balancing affordable energy, export competitiveness, supply reliability and long-term strategic autonomy.

   The U.S. administration's eventual tariff decisions and their impact on global energy markets will determine the scale of India's required response.

5. Note5 / 6

   

6. Note6 / 6

   

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