India’s Russian oil gamble hits home

The ripple effect is profound. The Reserve Bank of India estimates that every rupee of lost exports can cut domestic spending by 2.5 times. A loss of $40-60 billion in exports could translate to at least a total economic hit of $100 billion when accounting for purchasing power, potentially jeopardizing up to 100 million jobs

Inthe shadowed workshops of Surat, where diamond polishers hunch over whirring wheels, or along Andhra Pradesh's misty coastlines where shrimp farmers wade through brackish ponds at dawn, the pulse of India's economy beats not in spreadsheets but in sweat-soaked hands. These are the unsung engines of a nation that exports dreams woven into fabrics, carved into gems, and harvested from the sea. However, a series of geopolitical decisions has now placed these livelihoods in jeopardy, raising a critical question: Is India's energy security strategy benefiting its people or a select few corporate houses?

The crisis came to a head on August 27, 2025, when the U.S. imposed a significant 50 per cent tariff on a wide range of Indian goods. This punitive measure was a direct response to India's increasing reliance on discounted Russian crude oil, a move that Western nations view as indirectly financing Russia's war in Ukraine. This trade-off, which initially seemed like a savvy financial manoeuvre, has turned into an economic catastrophe for ordinary citizens, costing them jobs and income while a few powerful companies reap massive profits.

The two sides of the oil coin: Public vs. private interests

Following Russia's 2022 invasion of Ukraine, Western sanctions created a surplus of Russian oil, which Moscow offered at a steep discount. India's response to this opportunity was split along corporate lines.

Public sector companies, such as Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), adopted a cautious approach. While they increased their purchases of Russian crude to take advantage of the lower prices, they maintained a diversified portfolio of suppliers from the Middle East, Africa, and even the United States. This strategy helped them save money while mitigating the risk of international blowback.

Conversely, private sector giants like Reliance Industries and Nayara Energy leaned heavily into the Russian deal. Reliance, which operates the world's largest oil refinery in Jamnagar, Gujarat, became one of the top global buyers of Russian seaborne crude. By mid-2025, nearly half of its crude oil imports—approximately 18.3 million tonnes in a seven-month period— reportedly came from Russia, a dramatic increase from just 3 per cent in 2021.

Nayara Energy, which is partially owned by the Russian state-owned oil company Rosneft, went even further, with over 70 per cent of its crude reportedly coming from Russia. The profits from refining this discounted oil and reselling it to global markets largely benefited these private companies, but the consequences of their choices are now impacting the entire nation.

The human cost of corporate profits

The U.S. tariffs, which target an estimated $40-60 billion in annual Indian exports, have directly hit the industries that employ tens of millions of people.

•Diamond polishers in Gujarat: India's diamond and jewelry sector, centered in Surat, is a major employer. The U.S. is its largest market, accounting for 40 per cent of India's gem exports ($10 billion annually). With tariffs soaring from around 2 per cent to over 50 per cent, Indian gems are now uncompetitive, and buyers are shifting to alternatives from countries like Vietnam and Thailand. This threatens the livelihoods of millions of workers.

•Textile and garment workers: Textile hubs like Tiruppur in Tamil Nadu, Noida in Uttar Pradesh, and Ludhiana in Punjab face similar threats. India's textile and apparel exports to the U.S. are valued at $10.8 billion, representing about a third of total exports in the sector. Tariffs of up to 64 per cent could cause a massive loss of orders to competitors in Bangladesh or Mexico.

•Shrimp farmers in Andhra Pradesh: The seafood industry, particularly shrimp farming along the coasts of Andhra Pradesh and Odisha, is a critical source of income for many communities. India exports $2.4 billion worth of shrimp to the U.S., which represents a third of its total shrimp exports. With tariffs now over 60 per cent, U.S. buyers are looking for cheaper suppliers from countries like Ecuador and Vietnam.

•Artisans and craftsmen: The impact extends to other vital sectors, including carpets from Bhadohi and Mirzapur, leather goods from Agra and Kanpur, and handicrafts from Jaipur and Moradabad. These industries, which collectively export billions of dollars worth of goods to the U.S., now face prohibitive tariffs, putting countless small businesses and individual artisans at risk.

Small and medium enterprises (SMEs), the backbone of these sectors, face vanishing orders, idle factories, and loan defaults, rippling through suppliers, banks and communities.

The ripple effect is profound. The Reserve Bank of India estimates that every rupee of lost exports can cut domestic spending by 2.5 times. A loss of $40-60 billion in exports could translate to at least a total economic hit of $100 billion when accounting for purchasing power, potentially jeopardizing up to 100 million jobs. This economic churn could impact nearly a third of India's population. For these families, who are already struggling with stagnant wages and high living costs, the tariffs represent a direct threat to their survival.

A choice for the future: People over profit

India's leaders face a critical crossroads. The economic fallout from the U.S. tariffs is far greater than the savings from the discounted Russian oil. While the country reportedly saved between $2.5 and $5 billion per year on its oil purchases, the potential cost in lost exports is at least eight times that amount at around $40-60 billion, with the total economic damage potentially reaching $100 billion.

The benefits of the discounted oil trade were largely captured by a few corporate entities, while the costs are being borne by the very people who form the backbone of the nation's economy. The government's focus on national energy security, while understandable, has created a situation where the nation's most vulnerable citizens are paying the price for the financial gains of a few.

To navigate this crisis, India must shift its focus. Instead of doubling down on a risky strategy that benefits a select few, the government must prioritize the well-being of its masses. This includes:

•Diversifying oil sources to reduce reliance on Russia and mitigate geopolitical risk.

•Engaging in diplomatic negotiations with the U.S. to seek a reduction in the crippling tariffs.

•Providing direct support to exporters and workers in affected industries through subsidies, tax breaks, and market diversification programs.

The final reckoning: Whose prosperity, at whose price?

In the end, neither cheap oil nor chest-thumping diplomacy can insulate a nation from the toll exacted on its working millions. India’s flirtation with “strategic autonomy” — oscillating between superpowers while scorning consistent alliances — has come at a cost measured not in barrels but in broken livelihoods and enterprises. Sovereignty rings hollow if it delivers slogans to the hustings but hunger to the households.

National pride cannot be wielded as a justification for policies that punish the very people it claims to protect. Until global alliances are forged on trust rather than expedience, and reforms reach the everyday lives of families and small enterprises, the only verdict that matters is this: success will be measured at dinner tables, not in boardrooms or press conferences. True vision lies in protecting the prosperity of the many, not the vanity of the few.

(The author is former Senior Editor, The Economic Times, and currently practicing as an advocate at the Telangana High Court)