How will the U.S.’s Sanctioning Act affect India? | Explained
A new US law, the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, was signed into force, giving the US executive branch authority to impose tariffs of up to 100% on goods from countries ranked among the top five buyers of Russian crude oil or natural gas.
The law also renews and expands sanctions on Russian government officials, oligarchs, banks and financial institutions, and separately extends US sanctions on Iran's weapons and energy sectors.
India and China, currently the two largest importers of Russian crude, are the countries most exposed to the tariff provision, though the law does not trigger the tariff automatically — it is a discretionary presidential power.
A carve-out exempts countries that source less than 15% of their natural gas from Russia and are demonstrably reducing their Russian energy purchases, a threshold aimed more at European gas importers than at India's crude-oil-heavy import profile.
The legislation passed both chambers of the US Congress with broad bipartisan backing before being signed into law.
Secondary Sanctions and the CAATSA Precedent
Secondary sanctions are penalties a country imposes on third parties — including other sovereign states — for continuing to trade with a sanctioned nation, rather than sanctioning that nation directly. This extraterritorial tool has already shaped India-US relations once, through the Countering America's Adversaries Through Sanctions Act (CAATSA).
The new Act follows the same structural logic as CAATSA — Congress hands the President broad tariff authority over Russian-energy buyers, but whether it is actually used against India will depend on the same kind of strategic-partnership calculus that shielded India on the S-400 issue.
India's Crude Oil Import Dependence and Energy Security Policy
India imports roughly 85% of the crude oil it consumes, making the diversity and cost of its crude basket a core economic and strategic concern rather than a purely commercial one.
Key Details
- Russia has been India's largest single source of crude since 2022; its share of India's oil import bill fluctuated through 2025-26, falling to about 21% in January 2026 before climbing back above 37% by April 2026, and averaging around a third of India's total crude imports for the fiscal year.
- India's official position treats the Russian oil trade as a sovereign economic choice serving energy security for a large, import-dependent population, distinguishing it from any UN Security Council-mandated restriction (existing curbs are unilateral US/EU/G7 measures, not UN-authorized).
- The G7 price-cap mechanism, introduced in December 2022, was designed to keep discounted Russian oil flowing to buyers like India while limiting Moscow's revenue per barrel.
Because Russian crude has become structurally embedded in India's import basket, the Act's tariff-authority provision is aimed squarely at the kind of purchase pattern India has followed since 2022, putting India's refining sector and oil-marketing companies in the direct line of potential exposure.
Presidential Tariff Powers and WTO Tariff Bindings
Tariffs imposed through sanctions statutes like this Act are a unilateral executive instrument, separate from the tariff ceilings a country commits to under its World Trade Organization schedule of bound rates.
Key Details
- WTO members' "bound" tariff rates represent a ceiling they agree not to exceed on normal trade; a discretionary 100% tariff under a sanctions law sits well outside these commitments if invoked.
- Such measures are typically defended domestically and internationally by invoking a national-security rationale, echoing the logic of GATT Article XXI, which allows WTO members to take trade-restrictive action "necessary for the protection of essential security interests."
- Because the tariff is statutorily authorized but not self-executing, its actual imposition requires a further executive determination — a design that keeps the tool available as diplomatic leverage without committing to its use.
The gap between what the law permits (up to 100% tariffs) and what is actually imposed gives Washington negotiating leverage over New Delhi's Russian oil purchases while avoiding an immediate, binding trade confrontation.
- Act signed into US law: 18 September 2026 (Lindsey O. Graham Sanctioning Russia and Iran Act of 2026).
- Maximum discretionary tariff authorized: up to 100% on goods from top-five buyers of Russian crude oil or natural gas.
- Exemption threshold: countries importing less than 15% of natural gas from Russia while reducing purchases.
- CAATSA (the precedent secondary-sanctions law) enacted: August 2017; Section 231 covers "significant transactions" with Russia's defence/intelligence sectors.
- India's S-400 contract: approximately USD 5 billion, signed in 2018; Turkey sanctioned under CAATSA for an equivalent purchase in 2020.
- Russia's share of India's crude oil imports in FY2025-26: roughly 33% for the year, ranging between about 21% and 38% across individual months.