Discounted Oil May Invite More Tariffs: How Should an Entrepreneur Prepare?

India’s continued imports of discounted Russian crude have kept fuel prices stable, but have also drawn warnings from the U.S. Treasury Secretary Scott Bessent has hinted at secondary sanctions or higher tariffs on countries that maintain close trade ties with Moscow. For Indian exporters, this creates two possible risks: if India cuts Russian oil under pressure, fuel and input costs will rise; if it continues, sanctions may restrict access to key markets like the US and Europe. Either way, MSMEs who already run on thin margins must prepare.

The impact for small businesses is straightforward. 

• Higher crude prices mean costlier transport, electricity, and raw materials, which can directly eat into profitability.
   
• At the same time, if the USA and EU imposes new trade restrictions, MSMEs in textiles, engineering goods, handicrafts, and leather sectors heavily reliant on US and EU demand could face delayed orders or reduced competitiveness.

This is why exporters need a clear plan rather than waiting for government negotiations. 

• The first step is market diversification. MSMEs should actively seek opportunities in the Middle East, Africa, and Southeast Asia, where demand is growing and trade barriers are lower. 
   
• Second, focus on cost efficiency through energy-saving production, bulk procurement, and exploring renewable alternatives to limit exposure to fuel volatility.
   
• Third, MSMEs must use government support effectively. Incentives under RoDTEP, benefits from PLI schemes, and export credit guarantees through ECGC can all help cushion shocks from tariffs or sanctions. For more details here are the official links:
  • https://www.dgft.gov.in/CP/?opt=RoDTEP
  • https://www.india.gov.in/production-linked-incentive-pli-scheme
  • https://www.ecgc.in
     
• Fourth, strengthen compliance and transparency in supply chains. Meeting global ESG and traceability norms can keep Indian goods attractive in premium markets even under stricter trade rules. 
   
• Finally, MSMEs should consider cluster-based collaboration pooling logistics and procurement to negotiate better rates and reduce costs.

The global oil situation is uncertain, but exporters cannot afford to wait and watch. Whether India adjusts its oil imports or continues to face external pressure, MSMEs that diversify markets, cut costs, and maintain compliance will be better positioned to stay resilient. Ongoing trade talks, which may soon begin between India and the U.S., could ease some of the pressure and open room for negotiated relief. But for MSMEs, the choice is not about geopolitics; it is about staying prepared.