India and Sanctions on Russian Energy: Policy Response and Future Options

Selective sanctions on India expose the growing weaponisation of trade law in global energy politics.

In 2024, nearly 38 per cent of India’s crude oil came from Russia. Washington and Brussels are pressuring New Delhi to sever ties, even as their own imports from Moscow continue quietly. This tension lies at the heart of the debate on secondary sanctions. Comparing Western rhetoric with their practice reveals how coercive economic measures are reshaping the norms of global governance and narrowing the space for sovereign policy choice — a pattern exemplified by the selective enforcement of energy sanctions against India.

On August 6, 2025, the United States administration issued an executive order mandating a total 50 per cent tariff on Indian imports – 25 per cent under standard trade grounds, and another 25 per cent linked explicitly to India’s continued purchase of Russian oil. This measure has triggered one of the sharpest trade and diplomatic ruptures in US–India relations in two decades, severely straining strategic and economic ties. Parallel to this, the European Union’s (EU) eighteenth sanctions package against Russia, adopted on July 18, 2025, prohibits the import of petroleum products refined from Russian crude through third countries. Together, the US and EU actions not only jeopardise India’s energy security and economic autonomy but also push the limits of international law.

Western energy sanctions on Russia, and their selective enforcement against India, reveal how economic measures directed at third parties can influence legitimate commercial relations with a sanctioned state

Western energy sanctions on Russia, and their selective enforcement against India, reveal how economic measures directed at third parties can influence legitimate commercial relations with a sanctioned state. By conditioning access to their markets on compliance with sanctions against Russia, the US and EU have employed domestic trade tools to exert pressure on India’s external policy choices. This approach highlights a broader tension between economic sovereignty and the use of coercive instruments to universalise unilateral policies.

By conditioning access to their markets on compliance with sanctions against Russia, the US and EU have employed domestic trade tools to exert pressure on India’s external policy choices.

India’s engagement with Russia has been guided by pragmatic energy needs rather than political alignment. Yet the new sanctions risk constraining India’s autonomy through indirect coercion. The following discussion explores how these measures test the boundaries of lawful state conduct under international economic law. It situates them within India’s historical experience with sanctions and considers the policy options available to New Delhi as it seeks to protect its energy interests.

Selective Enforcement and the Law of Sanctions

Under international law, secondary sanctions are coercive measures that penalise third states or their entities for maintaining relations with a sanctioned actor. Unlike primary sanctions, which regulate a state’s own nationals and territory, secondary sanctions target external actors to influence their dealings with the primary target. They operate by altering access to the sanctioning state’s market or financial system, creating indirect pressure on third parties to conform to the sanctioning state’s policy objectives. This mechanism raises concerns for the principle of sovereign equality and the prohibition of coercive interference in another state’s domaine reserve, mainly when domestic regulatory tools are used to shape the external economic conduct of others.

Marko Milanović observes that economic sanctions constitute coercive interference when they pressure other states to alter lawful policy choices within their domestic jurisdiction. Sanctions that target a third state’s external relations – instead of the conduct of a primary target – can thus blur the line between legitimate measures and prohibited intervention. In this light, the recent US and EU measures against India seek to shape India’s energy policy through economic pressure. This approach raises questions about whether using domestic trade restrictions to compel third-party compliance with sanctions regimes is compatible with the principle of non-intervention.

The EU’s eighteenth sanctions package exemplifies how sanctions directed at one state can be used to influence the commercial relations of others. It prohibits the import of petroleum products refined from Russian crude through non-EU states, directly impacting Indian refiners such as Nayara Energy and Reliance Industries. In 2024 – 25, India exported petroleum products worth approximately USD 14.3 billion to the EU, most of which were refined from discounted Russian crude. By targeting goods of non-Russian origin, the EU measures extend the reach of its sanctions to third-party trade. The effect is to penalise legitimate commerce and indirectly pressure India to alter its energy relations with Moscow.

The US has gone further. On  August 6, 2025, President Donald Trump issued an Executive Order imposing an additional 25 per cent tariff on Indian imports linked to Russian energy trade. The total duties now stand at 50 per cent. The Order frames Indian oil purchases as indirectly sustaining Russia’s war economy, justifying tariffs on “national security” grounds. By conditioning India’s market access on compliance with its sanctions policy, the US has used domestic trade instruments to influence another state’s external commercial relations. Such measures prompt questions about whether these actions comply with the principles of sovereign equality and non-intervention under international law. The EU’s measures are equally difficult to reconcile with international law. By prohibiting petroleum products refined from Russian crude in India, the EU is effectively employing domestic trade rules to restrict lawful third-party commerce. This approach engages the principles of sovereignty and non-intervention under the UN Charter and raises questions under the General Agreement on Tariffs and Trade (GATT). Article XI prohibits quantitative restrictions, such as outright bans on imports or exports, while Article I requires equal treatment among trading partners. In addition, Article II of GATT prevents members from imposing tariffs above the “bound” rates they have undertaken at the World Trade Organization (WTO). Together, these provisions limit the use of trade measures that discriminate against particular states or products without multilateral justification.

Similarly, the US Executive Order invites scrutiny under the national security exception of Article XXI of GATT. Article XXI permits deviations from trade obligations only when measures are “taken in time of war or other emergency in international relations”. The WTO Panel in Russia – Traffic in Transit interpreted this phrase to cover situations of “armed conflict, latent conflict, or heightened crisis” (para. 7.76). The Panel required that such measures must be taken at the time of that emergency (para. 7.101), in good faith, and not as a pretext to bypass international obligations (paras. 7.132 and 7.133). As Tania Voon notes, the ruling reintroduced limits on a clause long considered self-judging, signalling that national security cannot serve as a blanket justification for trade restrictions. In this regard, while Russia’s invasion of Ukraine constitutes an armed conflict, extending such restrictions to third-state entities arguably falls outside the temporal and geographic scope under Article XXI. When, then, should the line be drawn between a state’s legitimate invocation of “security” and its use as a convenient rationale for economic coercion? Whether such reliance on Article XXI is permissible remains unsettled, highlighting the uncertainty surrounding secondary sanctions under the WTO framework. While the EU’s restrictions apply universally to petroleum products refined from Russian crude, the combined effect of EU and US actions has produced selective enforcement in practice – with India facing disproportionate pressure compared to other major importers.

Secondary measures that threaten trade penalties to compel India to abandon its lawful decision exemplify economic coercion targeted at that domain.

India’s purchase of Russian crude falls within the country’s reserved domain of energy and foreign economic policy. Secondary measures that threaten trade penalties to compel India to abandon its lawful decision exemplify economic coercion targeted at that domain. Without a justification related to India’s breach of an international obligation, such measures constitute prohibited intervention.

The central objective of the US and EU sanctions is to curb India’s reliance on Russian oil, which accounted for 38 per cent of India’s total crude imports in 2024. India sought Russian supplies to safeguard its core national interests – particularly, to secure affordable energy, contain inflationary pressures, and preserve its foreign policy autonomy. Although freight and shipping insurance costs rose due to the sanctions, India still realised modest savings from Russian imports. Far from destabilising global markets, India’s purchases played a stabilising role, preventing a broader supply shock that could have driven prices well above the USD 65–70 per barrel range seen in mid-2025.

Despite this stabilising function, Western states have sought to penalise India while excusing their own dependencies. In the first half of 2025, the EU imported EUR 4.48 billion worth of Russian LNG, a 22% increase from the same period in 2024, while Russian LNG exports to the EU rose to 21 billion cubic metres. Similarly, the US continues to import critical materials such as palladium, uranium and fertilisers. As External Affairs Minister S. Jaishankar noted, “Europe can’t make choices to prioritise its energy needs while asking India to do something else”, reminding critics that “at the end of it all, we make decisions that are in national interest.”

Ironically, India is not even the largest importer of Russian crude. In 2024, China imported 108.5 million tonnes, equivalent to approximately 2.17 million barrels per day (mbpd), compared with India’s 2.07 mbpd in July 2024, when it briefly surpassed China before slipping back. Yet, it is India, not China, that now faces the brunt of Western sanctions.

Arguably, the data showing reductions in Russian oil imports by the US and EU may seem to undercut the selective enforcement argument. But the inconsistency lies not in the decrease in trade, but in its uneven application. By displacing Russian oil from Western markets, the adjustment costs were effectively transferred to developing economies that relied on affordable energy. India’s decision to fill this gap helped stabilise global prices, benefitting Western consumers. Yet, instead of recognition, India faces coercion while Europe and the US recalibrate their own dependencies.

Beyond this selective application, a further weakness lies in the limited effectiveness of secondary sanctions.  Recent empirical work by Caetano et al. confirms that sweeping economic measures are blunt instruments, whereas targeted sanctions are more likely to yield compliance. Experience with Iran, Venezuela, and Cuba also shows that unilateral sanctions often generate humanitarian costs without altering state behaviour. Against this backdrop, it is improbable that US and EU secondary sanctions will compel India to change its energy strategy. Instead, they risk fragmenting global trade and weakening the legitimacy of the legal order.

India’s Pragmatic Sanctions Policy

India’s approach to economic sanctions has evolved through pragmatism rather than adherence to a fixed doctrine. Since independence, New Delhi has accepted UN Security Council (UNSC) sanctions as legitimate but has often hesitated to endorse or rigorously enforce them. It abstained on the Council’s 1992 vote imposing sanctions on Libya, reflecting unease with coercive measures under Chapter VII. Implementation has also been uneven. The UN Panel of Experts on the Democratic People’s Republic of Korea reported in 2018 that India, along with other states, had fallen short of full compliance with petroleum export restrictions and financial activities. After its mention in the UN implementation reviews, India strengthened enforcement of DPRK sanctions. This was reflected in successive statutory Orders listed by the Ministry of External Affairs and the corresponding Directorate General of Foreign Trade trade curbs.

At the same time, India has leveraged economic dependence when it judged it necessary. In 1989, the non-renewal of the Trade and Transit Treaties with Nepal resulted in severe cross-border disruption. Although not a formal sanction, this episode constituted applying de facto pressure following Kathmandu’s decision to purchase Chinese arms and levy tariffs on Indian goods. Earlier, in 1946, New Delhi imposed a trade embargo on South Africa to protest apartheid and discrimination against Indians.

The mixed record continues to shape India’s approach to contemporary crises. On Russia, the UN has not adopted any binding UNSC sanctions, as Moscow’s veto power prevents such action. Instead, the UN General Assembly has passed resolutions condemning the invasion and urging withdrawal, but these carry political weight rather than legal force.

In a space between law and politics, India has defended its commercial engagement with Russia as legitimate, emphasising energy security and strategic autonomy. Its response reflects a deeper pattern: where global rules prove uneven or paralysed, India privileges flexibility over alignment. Does this selective practice mirror the very patterns it critiques in others? Under what conditions does India choose to employ or tolerate coercive economic statecraft? This pragmatic consistency suggests a broader policy instinct — to defend decision-making autonomy amid an increasingly selective global order.

Policy Options for India

India now faces the challenge of balancing its principled opposition to unilateral sanctions with the pragmatic need to protect its economy from U.S. and EU measures. It may consider adopting both short- and long-term strategies to safeguard its sovereignty and economic interests.

In the short term, India may consider utilising the WTO to challenge the US and EU secondary sanctions. These measures violate GATT Article XI, which prohibits quantitative restrictions, as well as Article II, which limits tariffs to agreed bound rates. While the US could also invoke Article XXI, under the Russia – Ukraine Transit Case, this claim is reviewable and constrained by good faith and plausibility standards tied to an ‘emergency in international relations’ – not by a freestanding proportionality test. Building on the 2019 Russia-Ukraine Transit Case before the WTO, India could seek scrutiny of sanctions for overreach by arguing that Trump’s secondary tariffs are a misuse of the national security clause, as they lack plausibility and are not enacted in good faith.

A legal challenge at the WTO could be lengthy and uncertain, given the current paralysis of its appellate system. While it reinforces India’s commitment to multilateral rules, it may not yield quick outcomes. Alternatively, India may explore negotiating a sanctions waiver, as it did in 2018 when the US imposed sanctions on oil imports from Iran. Emphasising India’s energy security needs and New Delhi’s role in stabilising global oil markets during the India-US trade deal negotiations might secure temporary relief. This becomes even more pertinent given the recent breakdown of US-India trade talks, where discussions on tariff barriers and market access reportedly stalled. Additionally, India could consider carefully calibrated retaliation, imposing tariffs on US and EU goods to deter further sanctions. New Delhi’s 2019 retaliatory tariffs on US agricultural products in response to trade restrictions serve as a precedent. However, rather than asserting WTO consistency, India could frame such measures as temporary and proportionate, aimed at restoring balance, without implying full legal endorsement under WTO procedures. While negotiated waivers could provide short-term breathing space, they depend heavily on US goodwill and may involve concessions in other areas. Likewise, retaliatory measures can strengthen India’s bargaining position; however, they may risk escalating trade tensions and inviting reciprocal tariffs that affect Indian exporters.

In the long term, India could begin by decreasing its dependence on the US dollar. The 2023 India – UAE Agreement to trade in rupees exemplifies this approach. Expanding trade in local currencies through minilaterals, such as the BRICS, the Russia – India – China trilateral, and the India – Brazil – South Africa, among others, would shield India from dollar-based sanctions. But, de-dollarisation is a gradual and complex process, and local-currency trade may face liquidity, convertibility, and settlement challenges that limit its scale in the near term.

Simultaneously, India may also seek to diversify energy imports beyond Russia in the long run to reduce future sanctions risks. Strengthening domestic renewable energy and establishing an alternative supply chain would ensure long-term resilience and sustainability. The trade-off here lies between strategic autonomy and cost-efficiency. Diversification and renewables require significant upfront investments and infrastructure transitions, which may increase short-term costs before long-term benefits are realised.

Indian policymakers can also consider introducing legislation to block sanctions, similar to the EU’s Blocking Statute under Regulation 2271/96, which prohibits compliance with extraterritorial or secondary sanctions. This would safeguard Indian firms and also send a message to the West that India will oppose secondary sanctions that lack a solid legal foundation. However, such a blocking statute could expose Indian companies abroad to conflicting legal obligations and possible penalties, requiring careful calibration to avoid unintended economic fallout.

India could also invest in building its own sanctions-governance framework by developing coordinated capacities across the Ministry of External Affairs, Ministry of Finance, the Reserve Bank of India, the National Security Council Secretariat, and private industries.

In parallel, India could also invest in building its own sanctions-governance framework by developing coordinated capacities across the Ministry of External Affairs, Ministry of Finance, the Reserve Bank of India, the National Security Council Secretariat, and private industries. This may help in anticipating, assessing and managing the impact of foreign sanctions and enhance long-term resilience. Establishing such an inter-agency mechanism demands sustained political commitment, resource allocation, and information sharing between government and industry – factors that may take years to institutionalise effectively.

Note: The author would like to thank Dr Constantino Xavier, Senior Fellow, CSEP and the Foreign Policy & Security Studies team for their feedback.