The recently enacted trade legislation has introduced fresh tensions into the bilateral economic relationship between India and the United States. Enacted on 18 September and bearing the name of Senator Lindsey O. Graham, the 2026 legislation authorises the administration to levy tariffs of as much as 100 per cent on goods originating from nations classified as substantial buyers of Russian petroleum and gas, or from those deemed to be assisting in the circumvention of existing sanctions.
Whether and at what rate to apply these levies falls within executive discretion, as they do not take effect automatically. Prior to that, the legislation had cleared the Senate by a vote of 86 to 11 and the House by 262 to 159.
Both nations face notable vulnerability owing to their considerable reliance on Russian oil imports. The bill extends beyond a straightforward listing of those two nations. The framework applies thresholds drawn from leading importers, while also accommodating exemptions and waivers.
Having the authority to levy a tariff is a distinct matter from choosing to do so. The tariff level itself remains a policy decision, even as the country's bargaining leverage has grown. Observers have noted that the law raises doubts about whether it is applied uniformly.
A clause within the legislation shields American acquisitions of Russian uranium intended for nuclear reactor operations and medical isotope production. Nations whose purchases of Russian natural gas fall beneath a defined ceiling and that are actively working to cut their reliance on such supplies would qualify for an exemption under the measure.
For decades, the European Union stood as one of Russia's foremost buyers of natural gas, though it has since curtailed that reliance considerably and adopted a schedule to eliminate the remaining flows of pipeline gas and liquefied natural gas from Russia. According to available reports, the country has not sought protection from international repercussions.
Analysts have called for uniform evaluation of tactical decisions. Regardless of an economy's scale, trading relationships with a market of such purchasing power and breadth are characterised as difficult to exit. Indian exporters continue to rely on US buyers, businesses, and technology networks as key trading partners.
Expanding trade agreements with Europe, the United Kingdom, Gulf economies, ASEAN, Africa, and Latin America has been identified as a priority worth pursuing. The stated aim is to ensure no single trading partner becomes the cornerstone of the country's export dependence.
Expanding procurement across suppliers in Russia, the Gulf region, the United States, and other established exporters — weighted by cost, availability, and geopolitical considerations — has been identified as a recommended approach for India's energy strategy. Analysts have noted that abruptly switching to a new supplier in response to political considerations may drive up the cost of imports and strain foreign-exchange reserves.
Pharmaceutical companies have been identified as meriting independent oversight and review. Firms including Sun Pharma, Dr Reddy's Laboratories, and Lupin hold substantial stakes in the US pharmaceutical market. India ranks among the top suppliers of low-cost medicines to American consumers, while the United States stands as the single largest destination for Indian pharmaceutical exports.
Under the current policy, generic pharmaceuticals benefit from a two-year exemption from import duties, after which levies of 100 per cent and subsequently 200 per cent are scheduled to take effect. Analysts have noted that the two matters are distinct and ought to be treated as such, rather than grouped together.
India's presidency of BRICS falls at a notable juncture. While the three nations vie with one another across certain domains, shared interests open pathways for collaboration between them. Talks among BRICS nations have increasingly prioritised robust supply networks, commerce, foreign investment, and non-traditional frameworks for economic collaboration.
Tariff pressure has not consistently led to swift concessions, as Beijing's response has illustrated. Analysts have outlined a range of potential approaches, including pursuing ongoing trade discussions with Washington, seeking exemptions or transitional arrangements where legitimate interests can be established, accelerating free trade agreements and broadening export markets, building domestic capacity in pharmaceuticals, electronics, energy equipment, and advanced technologies, expanding trade conducted in the rupee and other local currencies where commercially feasible, and maintaining strategic petroleum reserves drawn from diversified supply sources.
Members of the Indian diaspora have been identified as potential advocates for raising awareness among American audiences about the contributions of Indian pharmaceuticals, technology, skilled labour, and competitively priced goods to the broader US economy. India's approach, analysts have argued, would balance national interest with international engagement rather than defaulting to either hostility or submission.
