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NEW DELHI – In a significant reshuffling of global supply chains and energy alliances, United States trade officials have signaled that India is increasingly positioned as the primary manufacturing alternative to China for American corporations. This shift follows a landmark interim trade agreement that has seen New Delhi begin a strategic scale-back of Russian oil purchases in exchange for substantial tariff relief from Washington.
The “Waystation” Strategy
Speaking on the sidelines of bilateral trade talks on Tuesday, February 10, 2026, U.S. Trade Representative (USTR) Jamieson Greer highlighted India’s evolving role in a “resilient and secure” global economy. Greer described India as a strategic “waystation” for companies looking to diversify their production bases away from China.
“We know that many companies already are going in that direction,” Greer stated. “India has a lot of folks and significant manufacturing capacity. As we shift away from overdependence on certain markets, India can be a good source as long as the trade remains balanced and fair.”
The comments underscore a broader U.S. effort to “friend-shore” supply chains, moving critical manufacturing to nations that align more closely with American economic and security interests.
Energy for Markets: The Oil Trade-Off
The warming of trade ties has been directly linked to India’s commitment to wind down its reliance on Russian crude. Following the 2022 invasion of Ukraine, India became the world’s largest buyer of discounted Russian oil—a move that previously drew “punitive” tariffs from Washington, pushing total duties on Indian goods as high as 50% in 2025.
Under the new framework established by the Trump administration in early February 2026:
Tariff Relief: The U.S. has removed the 25% “punishment” tariff and reduced reciprocal duties to 18%.
Energy Shift: India has reportedly agreed to halt or significantly reduce Russian oil imports, pivoting instead toward U.S. shale oil and Venezuelan crude.
Import Surge: India has committed to an aspirational goal of purchasing $500 billion in U.S. goods—including energy, aircraft, and agricultural products—over the next five years.
Refineries in Transition
Data indicates that the transition is already underway. Russian oil imports, which peaked at 2.1 million barrels per day (bpd) in 2023, fell to 1.1 million bpd in January 2026. Industry analysts expect this number to drop below 1 million bpd by next month as major refiners like Indian Oil (IOC) and Bharat Petroleum (BPCL) refrain from placing new orders once existing contracts expire.
However, the shift is not without technical hurdles. Most Indian refineries are calibrated for the “medium-sour” grade of Russian Urals. Switching to “light-sweet” U.S. crude or “heavy” Venezuelan oil will require technical adjustments and temporary downtime.
“The overall economic benefit of a trade deal with the US—enabling us to reach a $5 trillion economy—outweighs the short-term advantage of discounted Russian crude,” noted one energy consultant.
The Road Ahead
While the White House has hailed the deal as a definitive move by India to “stop directly or indirectly importing Russian oil,” New Delhi remains characteristically pragmatic. Foreign Secretary Vikram Misri emphasized that while India is diversifying its energy basket, its primary responsibility remains “energy security” for its 1.4 billion citizens.
The interim agreement is expected to be finalized by mid-March 2026, paving the way for a more comprehensive Bilateral Trade Agreement (BTA) that could redefine the economic map of the Indo-Pacific.
