Welcome to Foreign Policy’s South Asia Brief.

The highlights this week: New U.S. and EU sanctions on Russian oil companies have knock-on effects for India, Indian Prime Minister Narendra Modi doesn’t make an in-person appearance at the ASEAN summit, and Afghanistan-Pakistan talks break down after cross-border violence.

Welcome to Foreign Policy’s South Asia Brief.

The highlights this week: New U.S. and EU sanctions on Russian oil companies have knock-on effects for India, Indian Prime Minister Narendra Modi doesn’t make an in-person appearance at the ASEAN summit, and Afghanistan-Pakistan talks break down after cross-border violence.

Sign up to receive South Asia Brief in your inbox every Wednesday.

Sign up to receive South Asia Brief in your inbox every Wednesday.

Sign Up

By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.

Enter your email

Sign Up
Loading…

India’s Oil Dilemma

India—the world’s second-biggest importer of crude oil from Russia—is bracing for impact following the recent announcement of new U.S. and European Union sanctions on Russian oil companies.

Despite India’s deep commercial partnership with Russia, it hasn’t always been a top customer for its oil. New Delhi imports 85 percent of its total oil needs. But in 2021, the year before Moscow launched its full-scale invasion of Ukraine, just 2 percent of these imports came from Russia. That year, its top source for oil imports was Iraq, and India was also the top destination for U.S. oil exports.

But India’s purchases of Russian oil soared amid the war in Ukraine, registering at some 40 percent of its total crude imports for the last two years. New Delhi has justified this dramatic spike by citing low costs; the Trump administration has denounced it as war profiteering and slapped an additional 25 percent tariff penalty on India.

Now India is in a tough spot, with refiners expected to significantly decrease imports of Russian oil, which amounted to about 1.7 million barrels per day during the first nine months of this year. The two Russian energy giants sanctioned by the United States—Rosneft and Lukoil—supply around 60 percent of India’s total oil imports from Russia. (Only Rosneft has also been targeted by the European Union.)

India’s state-owned oil companies will take steps to ensure that none of their imports come directly from Rosneft and Lukoil; many of these purchases already come from intermediaries.

One of India’s private energy giants isn’t so fortunate, though. Last December, Mukesh Ambani’s Reliance Industries signed a deal with Rosneft to import between $12 billion and $13 billion worth of oil annually for 10 years. That equated to around 500,000 barrels per day, or 50 percent of Reliance’s overall crude imports. The company has said it will comply with the new sanctions but did not mention the deal.

In a statement, Reliance said it would rely on “time-tested, diversified crude sourcing strategy” to keep up successful refining operations. Overall, however, India may not bounce back so quickly. There are no immediate alternatives to Russian oil at such a cheap price point. The country will likely increase its already robust imports from the Middle East, which could add significant cost.

This is where India’s ongoing trade talks with the United States become important. The Trump administration has demanded that India reduce its Russian oil imports, and New Delhi may now try to negotiate an arrangement to import more U.S. oil at a lower price point. It arguably has some leverage, in that it has already increased oil imports from the United States in recent years.

One recent opportunity for New Delhi to discuss such matters with Washington was squandered: This week, Indian Prime Minister Narendra Modi opted to attend the Association of Southeast Asian Nations (ASEAN) summit in Malaysia virtually, preventing him from meeting in person with U.S. President Donald Trump.

The impact of the sanctions on India’s energy security shouldn’t be overstated. The country continues to rely heavily on coal, which comprises 46 percent of its energy mix, and it has a diversified set of suppliers for both oil and gas. Still, oil accounts for nearly one-third of India’s total energy consumption—higher than any other source—meaning that it’s critical for both household and commercial use.

There may be a silver lining: The sanctions scare is a reminder for India of the risks of its heavy reliance on imported hydrocarbons. It could bolster those voices that have long called for New Delhi to accelerate the development of indigenous renewables—a goal that the Modi government has embraced and pursued.

What We’re Following

Modi misses ASEAN. India didn’t provide a reason for sending External Affairs Minister S. Jaishankar to the ASEAN summit in Kuala Lumpur instead of Modi. But it was likely a combination of Modi wanting to stay in the country during the final preparations for key state elections in Bihar next month and perhaps wanting to avoid a meeting with Trump (and possible awkward moment) given ongoing U.S.-India tensions.

Modi’s in-person absence was still striking, since India has ascribed geopolitical importance to ASEAN. The group includes some of its closest partners in Asia, such as the Philippines and Vietnam; neighbors that are important to its connectivity interests, such as Myanmar and Thailand; and growing economies such as Singapore—all of which are important for India amid Trump’s tariffs.

Modi did deliver a virtual speech to the summit and linked India’s fate to that of ASEAN. “The 21st century is our century, the century of India and ASEAN,” he said.

Afghanistan-Pakistan talks collapse. Four days of negotiations between Islamabad and Kabul meant to cement a long-term cease-fire after cross-border violence this month—the deadliest since the Taliban returned to power in Afghanistan in 2021—ended without an agreement on Tuesday.

Pakistani Information Minister Attaullah Tarar said the Taliban “kept deviating from the core issue,” a reference to Pakistan’s demand that the group rein in the Tehrik-i-Taliban Pakistan (TTP), a Taliban ally that has carried out frequent attacks across the border from bases in Afghanistan. Earlier Pakistani reports said Taliban officials were refusing to go beyond verbal pledges to curb the TTP.

The unsuccessful result isn’t surprising, but the prospect for renewed violence has now increased. On Wednesday, the TTP staged a bomb attack against security forces in Pakistan, killing at least six soldiers. Such assaults triggered this month’s violence, with the Pakistani military carrying out airstrikes against TTP targets in Afghanistan and the Taliban retaliating with attacks on Pakistani border posts.

Both sides have talked tough. On Wednesday, Pakistani Defense Minister Khawaja Asif warned on X that if cross-border attacks continued, Pakistan could “completely obliterate” the Taliban regime. The Taliban have threatened in recent days to retaliate against any Pakistani strikes with attacks on Islamabad. The Taliban lack the capacity to do so; the threat was likely a reference to possible TTP actions.

Adani scoop. The Washington Post published an investigation last week alleging that the Indian government directed $3.9 billion from the state-owned Life Insurance Corp. of India (LIC) to the businesses of Indian billionaire Gautam Adani—a close friend of Modi. The LIC quickly rejected the allegations, and many supporters of the Indian government have pushed back against the Post story.

However, the wide coverage that the allegations have already garnered makes the report awkward for Adani. A core theme of Adani’s messaging in the last few years has been defiance in the face of claims about fraud and other violations; in effect, such allegations haven’t hurt his businesses, which remain resilient. But reports that Adani businesses have received massive amounts of funding from New Delhi fly in the face of this messaging.

FP’s Most Read This Week

Under the Radar

U.S. Secretary of State Marco Rubio made a notable comment about U.S.-Pakistan relations in an exchange with journalists on his way to Qatar over the weekend. “We see an opportunity to expand our strategic relationship with Pakistan,” Rubio said.

Though U.S.-Pakistan ties have enjoyed an unexpected high during Trump’s second term so far,  the main focus has been commercial. Trump and other White House officials have expressed interest in Pakistan’s critical minerals, energy, and cryptocurrency resources. But Rubio’s comments suggest that the Trump administration’s stakes in the relationship could go beyond business.

This would be a major change. Washington has showed little interest in working closely with Islamabad, especially since the U.S. withdrawal from Afghanistan in 2021. In the final days of the Biden administration, officials weren’t even willing to acknowledge Pakistan as a U.S. ally, though it has major non-NATO ally status.

Rubio didn’t elaborate on how he envisioned a U.S.-Pakistan strategic partnership playing out, and his comments may be more aspirational than specific. But with Pakistan recently becoming a formal part of the Middle East’s security architecture—inking a mutual defense pact with Saudi Arabia—the Trump administration may see attractive pathways for engagement beyond the commercial space.