New US sanctions bill complicates Modi’s energy policy decisions

India has spent the last few years quietly becoming one of Russia’s biggest oil customers, snapping up deeply discounted crude while Western nations turned their backs on Moscow. That trade just got a lot more expensive to maintain.

The US Congress passed the Lindsey O. Graham Sanctioning Russia and Iran Act on September 16, with the House voting 262-159 after the Senate cleared it 86-11 back in August. The bill authorizes tariffs of up to 100% on goods from major purchasers of Russian oil, a provision that puts India squarely in the crosshairs alongside China, Azerbaijan, Hungary, and Slovakia.

A $40.8 billion problem

The numbers tell the story of just how deep India’s Russian energy dependence runs. Russian crude accounted for roughly 30% of India’s oil imports across FY2026, a tab worth approximately $40.8 billion. At its peak in mid-2026, that share climbed above 40%.

The new legislation doesn’t just target oil purchases directly. It expands sanctions across Russia’s broader energy sector, financial institutions, and its so-called shadow fleet of tankers. It also extends sanctions on Iran, closing another discount crude pipeline that several Asian nations have relied on.

India’s government responded quickly. As of September 17-18, New Delhi warned that the sanctions could jeopardize bilateral ties with the US, its largest trading partner.

The tariff squeeze isn’t new, but it just got worse

This isn’t India’s first brush with US trade pressure over its Russian energy purchases. Previous rounds of tariffs related to Russian oil buying had already reached up to 50% on some Indian goods before partial relief arrived in February 2026. The new bill raises the ceiling to 100%, essentially doubling the maximum economic penalty Washington can impose.

The bill’s bipartisan support makes negotiation harder. An 86-11 Senate vote doesn’t leave much room for a future president to quietly waive enforcement.