Why the 25% Tariff Was Imposed

Washington/New Delhi – In August 2025, the United States put an extra 25% duty on every item coming from India. This was on top of the normal 25% “reciprocal” tariff that President Trump had already placed on many countries. The total became 50% for many Indian products.

The reason was simple: America did not like India buying large amounts of cheap Russian oil after Russia invaded Ukraine in 2022. Washington wanted countries to stop helping Russia earn money from oil sales. India, however, saw the discounted Russian crude as a way to keep fuel prices low for its 1.4 billion people and to save foreign exchange.

Indian refiners bought more than one million barrels per day from Russia at one point. That made India the biggest buyer of Russian oil in the world. America responded with the extra tariff to put pressure on New Delhi.

The Turning Point: Trump-Modi Call and the New Understanding

On 2 February 2026, President Trump announced that he had spoken to Prime Minister Narendra Modi. He said India had agreed to stop buying Russian oil, buy more energy from America (and possibly Venezuela), open its market more to American goods, and work on defence ties for the next ten years.

A few days later, on 6 February, Trump signed an executive order. From 12:01 am on 7 February 2026 (Washington time), the extra 25% punitive tariff was removed. The normal reciprocal tariff came down from 25% to 18%. Indian goods entering America after that time will pay only 18% duty instead of 50%.

The White House order clearly says: “India has committed to stop directly or indirectly importing Russian Federation oil… and has recently committed to a framework with the United States to expand defence cooperation over the next 10 years.”

What the Executive Order Actually Says

The order also warns that if America later finds India has started buying Russian oil again, the extra 25% duty can come back immediately. US agencies will keep watching India’s oil purchases closely.

India’s Stand: No Official Confirmation Yet

The Indian government has not issued any statement saying it will completely stop Russian oil imports. Officials in New Delhi have only said that India will always put its own energy security first.

Commerce Minister Piyush Goyal told reporters that a joint statement with America is coming soon and that both sides are working on a bigger trade agreement by March 2026.

Refiners in India say they are waiting for clear instructions from the government before they cancel existing contracts with Russian suppliers. Many long-term deals still have months to run.

How Much Does India Save?

Indian exporters to America – garments, jewellery, pharmaceuticals, auto parts, engineering goods – were facing very high costs because of the 50% duty. Many small and medium companies were losing orders. The drop to 18% will make their products cheaper in the US market and bring back business.

The government and industry bodies say this relief could add several billion dollars to India’s exports every year.

The Bigger Picture: $500 Billion Energy Promise?

President Trump has spoken about India buying “over $500 billion” worth of American energy, technology, farm goods and other items in the coming years. Indian officials have not confirmed any such fixed number. They say India will buy more American LNG and crude when the price is right, but will not stop looking at the cheapest options available in the world market.

Defence Cooperation Angle

The executive order mentions a new 10-year framework for defence ties. India has already been buying more American weapons and military equipment in recent years. America sees India as a key partner in the Indo-Pacific region. This trade step is clearly linked to stronger strategic relations.

What Opposition Leaders Are Saying

Several opposition parties have called the reported oil pledge a “threat to India’s sovereignty”. They say no country should tell India where to buy its oil. Some leaders have asked the government to explain clearly whether India has really promised to stop Russian imports.

Will India Really Stop Buying Russian Oil?

Most experts say a sudden full stop is unlikely. India has reduced Russian crude purchases in recent months (from over 2 million barrels a day at peak to lower levels now), but Russia still supplies a big share.

Shifting completely to American or Venezuelan oil would cost more and take time. Indian refiners have spent money to process heavy Russian crude. Changing suppliers overnight is not easy.

What It Means for Ordinary Indians

Lower tariffs mean more export orders, more factory jobs, and possibly better prices for some imported goods. At the same time, if fuel prices rise because of costlier oil, that will hurt common people. The government will have to balance these things carefully.

FAQs

Q1. What exactly changed on 7 February 2026?

The extra 25% penalty duty on all Indian goods was removed. The basic tariff rate came down to 18%. So most Indian products now face only 18% duty in America instead of 50%.

Q2. Did India officially promise to stop Russian oil?

The US says India has committed to stop direct and indirect imports. The Indian government has not issued any such public statement yet. It has only said energy security remains the top priority.

Q3. Will petrol and diesel prices go up in India?

It depends on what oil India buys next. Russian crude was cheaper. If the government shifts to costlier sources, fuel prices may rise. The government has promised to keep prices stable as much as possible.

Q4. How much money will Indian exporters save?

Industry estimates say the relief could help exporters earn several billion dollars more every year because their goods become cheaper in the American market.

Q5. Can the tariff come back?

Yes. The executive order says if America finds India buying Russian oil again, the 25% extra duty can be put back quickly.

Q6. What about the $500 billion purchase promise?

President Trump mentioned it, but India has not confirmed any fixed amount. India will buy American goods when they are competitive.

Looking Ahead

This tariff removal is being called an “interim” step. Both countries say they are working on a bigger trade agreement. If everything goes well, tariffs could come down further and trade could grow a lot in the coming years.

For now, Indian exporters are breathing a sigh of relief. Refiners are watching the government for clear signals on oil purchases. And 1.4 billion Indians are hoping that fuel remains affordable and jobs keep growing.