GS3Indian Economy·20 Sept 2026·4 min read

Lindsey O. Graham Act: 100% US Tariffs Threaten India’s Oil Imports and WTO Commitments

Today, India submitted a revised schedule to the WTO that accelerates tariff reductions on twelve major product categories, cutting bound rates by up to four percentage points. The adjustment is intended to keep India on track with its 2025 commitment while countering the risk of additional US trade measures linked to forced‑labour findings. Under the new schedule, the average bound tariff on textiles will fall from 12% to 8% by 2028, potentially boosting export earnings by about $1.2 billion per year.

•India faces the prospect of a 100 % tariff on most of its exports after the United States enacted the Lindsey O.
•Graham Sanctioning Russia and Iran Act in 2026.
•The measure targets countries that continue buying Russian crude after a 30‑day window, a scenario that could sharply raise fuel prices at a time when the Strait of Hormuz remains congested and crude trades above $100 a barrel.

India faces the prospect of a 100 % tariff on most of its exports after the United States enacted the Lindsey O. Graham Sanctioning Russia and Iran Act in 2026. The measure targets countries that continue buying Russian crude after a 30‑day window, a scenario that could sharply raise fuel prices at a time when the Strait of Hormuz remains congested and crude trades above $100 a barrel.

What the Act Mandates

The legislation authorises the United States Trade Representative to levy a tariff of up to 100 % on any good originating in a country that satisfies either of two conditions.

▸A country ranked among the five largest importers of Russian crude oil or natural gas in the 12 months before the Act’s enactment.
▸The same country continues to import Russian oil or gas after a 30‑day period following the law’s commencement.

The tariff is “in addition to any other duty”, meaning it stacks on existing levies such as those under Section 301 and Section 232. The Act also extends sanctions on Iran for five years, until 2031.

India’s Oil Import Profile and Immediate Economic Shock

India’s reliance on Russian crude places it squarely within the first criterion. While precise volumes are undisclosed, Indian oil marketers have repeatedly asserted that purchases comply with sanctions, yet the country remains a top‑five buyer.

▸The Strait of Hormuz, a key transit chokepoint, is currently constrained, limiting alternative supply routes.
▸Crude prices have settled comfortably above $100 per barrel, inflating the cost of any shift to new sources.
▸A 100 % tariff on Indian exports would erode competitiveness across sectors that already shoulder a 10 % duty under Section 301 for alleged forced‑labour links and a 50 % duty on steel, aluminium and copper under Section 232.

The combined fiscal burden could translate into higher pump prices, a politically sensitive issue ahead of the state elections slated for 2027.

Overlap with Existing US Trade Measures

India already contends with two major US trade actions.

▸Section 301 of the Trade Act of 1974 imposed a 10 % tariff on Indian imports after a probe into forced‑labour practices.
▸Section 232 of the Trade Expansion Act of 1962, expanded under the Trump administration, raised duties on steel, aluminium and copper to 50 %.

Because the new tariff is cumulative, Indian exporters could face a combined levy exceeding 150 % on certain products, severely distorting trade flows and undermining the cost‑competitiveness of Indian manufacturing in global markets.

WTO Obligations and the Special Safeguard Mechanism

India’s tariff policy is bound by its commitments under the World Trade Organization (WTO) Agreement on Agriculture (AoA).

▸Article 5 obliges India to implement linear tariff cuts for sensitive products over a ten‑year period.
▸Article 13 introduces the Special Safeguard Mechanism (SSM), permitting temporary tariff hikes only when imports cause “unforeseen price spikes” and meet WTO‑approved criteria.
▸Article 14 tasks the Committee on Agriculture with monitoring compliance and adjudicating disputes.

Domestically, the Foreign Trade (Development and Regulation) Act 1992 (amended 2015) empowers the DGFT to issue notifications effecting tariff reductions and to invoke the SSM under AoA Article 13. Any unilateral 100 % tariff imposed by the United States would clash with these WTO rules, exposing India to potential dispute settlement proceedings.

Did You Know? The WTO’s SSM was designed after the 2008 food‑price crisis to give developing countries a safety valve against sudden import surges, but it has been invoked only sparingly.

Policy Options and Geopolitical Calculus

India can pursue three pragmatic avenues.

▸Seek a presidential waiver: The Act allows the US President to waive tariffs if he certifies that doing so serves US national interests, or if Russia signs a peace accord accepted by Ukraine.
▸Diversify energy sources: Accelerating contracts with Middle‑East and African exporters could reduce reliance on Russian crude, albeit at higher short‑term costs given current price levels.
▸Leverage WTO dispute mechanisms: By filing a complaint, India could argue that the US tariff contravenes Article 13’s safeguard criteria, potentially securing a suspension of the measure while the panel deliberates.

Each route carries trade‑offs. A waiver would preserve export markets but hinges on US political calculations; diversification demands fiscal space and infrastructure; WTO litigation risks retaliation and prolonged uncertainty.