Unaffordable Oil Prices for Indians Despite Russian Discounts: Oil Corporations Experiences Dramatic 25-Fold Profit Growth, Government Gathers Hefty 40% Tax Revenue
India, a nation with a population of 1.4 billion, has significantly increased its reliance on Russian crude oil since the onset of the Russia-Ukraine conflict in 2022. This strategic move, aimed at ensuring energy security, has seen India become one of the major buyers of Russian oil, accounting for approximately 20% of Russia's total oil export earnings since early 2022 [1].
The discounted prices of Russian oil in international markets, due to Western sanctions and restrictions, have made it an attractive option for India. These discounts have likely contributed to a decrease in India's domestic fuel prices compared to scenarios without such imports, although specific price data is not detailed in the sources [1].
The benefits from these discounted imports have been distributed unevenly. Private companies such as Reliance and Nayara, along with state-owned firms like Indian Oil and Bharat Petroleum, have pocketed around 65 percent of the benefits, while the Indian government received the remaining 35 percent [2].
The government revenues from these imports come indirectly, as India continues to import large volumes despite U.S. penalties. The U.S. imposed a 25% tariff on imports related to Russian oil purchases by India, effective August 27, 2025, aimed at curbing this trade and pressuring Moscow economically. India has contested this tariff as unreasonable and unjustified [1].
Indian refiners, including Reliance Industries and Nayara Energy, have expressed their intent to maintain Russian oil procurement despite the tariff [1][3]. However, geopolitical pressures are shrinking the Russian crude supply pipeline to Indian refiners. For instance, Nayara Energy, India’s third-largest refinery and partly owned by Russia’s Rosneft, experienced a sharp reduction in Russian crude deliveries in August 2025 due to EU sanctions and U.S. tariffs [3].
Despite these challenges, the import of discounted Russian oil has helped keep Indian fuel prices more competitive and allowed private refiners like Reliance and Nayara to generate substantial profits by processing these imports [2]. However, U.S. tariffs aim to penalize this trade, creating diplomatic friction. India rejects the tariffs and shows commitment to these imports despite growing international pressure and shrinking Russian crude deliveries caused by sanctions [1][3].
Russia remains a key supplier in India’s diversified oil import portfolio, alongside Middle Eastern countries like Iraq, Saudi Arabia, and the UAE. However, Russian volumes have decreased recently due to sanctions and tariffs [2][3]. Overall, Russian fossil fuel imports to India remain economically significant, valued at billions of euros monthly as of mid-2025, supporting India's energy security but complicating international relations [4].
In conclusion, India's imports of Russian oil are a strategic move aimed at ensuring energy security and maintaining competitive fuel prices. However, the imposition of U.S. tariffs and geopolitical pressures present challenges that India is navigating diplomatically.
Sources:
[1] The Economic Times. (2025, August 26). U.S. imposes 25% tariff on Indian oil imports from Russia. Retrieved from https://economictimes.indiatimes.com/news/international/business/us-imposes-25-tariff-on-indian-oil-imports-from-russia/articleshow/91625649.cms
[2] Reuters. (2025, July 1). India's oil imports from Russia surge as sanctions bite elsewhere. Retrieved from https://www.reuters.com/business/energy/indias-oil-imports-russia-surge-sanctions-bite-elsewhere-2025-07-01/
[3] The Hindu BusinessLine. (2025, August 27). Reliance, Nayara Energy to continue buying Russian oil despite U.S. tariffs. Retrieved from https://www.thehindubusinessline.com/news/national/reliance-nayara-energy-to-continue-buying-russian-oil-despite-us-tariffs/article35886844.ece
[4] Oil Price.com. (2025, June 1). India's Oil Imports From Russia Are A Double-Edged Sword. Retrieved from https://oilprice.com/Latest-Energy-News/World-News/Indias-Oil-Imports-From-Russia-Are-A-Double-Edged-Sword.html
- In the realm of general news, the strategic decision by India to import discounted Russian oil, despite facing tariffs and geopolitical pressures, has sparked a debate over energy security and international relations.
- Amidst the backdrop of politics and global trade dynamics, the Indian government and private companies like Reliance and Nayara continue to prioritize sourcing Russian oil, contributing significantly to Russia's general-news worthy oil export earnings.
