Examine how geopolitical choices such as energy imports increasingly shape India's trade outcomes, with reference to recent India–U.S. trade negotiations.

In August 2025, the U.S. put an extra 25% duty on Indian goods specifically because India was importing Russian oil. This took total tariffs to 50% [1]. The episode shows that India's trade outcomes now depend partly on its geopolitical choices, not only on competitiveness.

Energy and strategy in the India–U.S. negotiations

• Energy as a trigger for tariffs: Executive Order 14329 tied the penalty to India's "direct or indirect" imports of Russian oil [1].
• Energy as a bargaining chip: According to the U.S. fact sheet, the penalty was removed after India committed to stop buying Russian oil and to buy over US$500 bn of U.S. energy, ICT, coal and other products [3].
• Market-access result: The BTA framework cut tariffs on US$30.94 bn of exports from 50% to 18%, and on US$10.03 bn to zero. Sectors covered include textiles, leather, gems and machinery [2].
• Strategic spillovers: India also agreed to negotiate digital trade rules and to align with the U.S. on export controls and economic security [3].

Geopolitics in other trade channels

• China: India has eased its curbs on investment from countries that share a land border with it. The 2026 revision fast-tracks proposals in electronic components within 60 days [5]. This weighs security concerns against the need for supply-chain inputs.

Implications

• Less strategic autonomy: Choosing where to buy energy used to be a question of price. It now carries a cost for exports.
• Erosion of WTO rules: Penalties aimed at one country sit uneasily with the MFN principle in GATT Article I [4]. This makes trade rules less predictable.
• Remaining costs: The 18% tariff is still above pre-2025 levels. Concessions on farm goods such as tree nuts, soybean oil and DDGs [3] are politically sensitive in India.
• Energy bill: Replacing discounted crude may make India's import basket more expensive.

Way forward

• Diversify markets: Exports hit a record US$863.1 bn in FY26, driven by the UAE, UK and Australia [6]. India should make full use of the UK CETA and EFTA TEPA [7].
• Diversify energy sources so that no single supplier or buyer gains leverage over India.
• Set clear red lines on agriculture and dairy, and push for WTO reform of rules on unilateral tariffs.

Geopolitics now shapes India's trade terms as much as costs do. By spreading its energy sources, deepening FTAs and protecting sensitive sectors, India can use tariff pressure as a push towards resilient, diversified exports. This keeps it in line with strategic autonomy and SDG 17 on global partnerships.