Amidst indications of easing trade tensions between the United States and India, a top US official has stated that Washington is prepared to finalize a trade agreement with New Delhi once it ceases its purchase of Russian oil and opens its market. US Commerce Secretary Howard Lutnick, in an interaction with CNBC, said that the Donald Trump administration is going to “sort out” a trade deal with India, but once New Delhi stops buying Russian oil.

Lutnick highlighted that before the war between Russia and Ukraine, India imported only 1% of its oil from Russia. However, that number has surged to 40% because of the sanctions, allowing India to buy oil at discounted rates. He said that India is refining this oil and selling it to the rest of the world, profiting significantly. According to Lutnick, President Trump views this situation as unacceptable and insists that India halt this practice.

These comments from the US Commerce Secretary follow social media posts from both President Trump and Prime Minister Narendra Modi suggesting a potential thaw in relations. Trump mentioned that the U.S. and India are "continuing negotiations to address the trade barriers". Modi responded by stating that both countries "will work together to secure a brighter, more prosperous future".

India's significant imports of Russian crude oil have been a major point of contention for the Trump administration. Last month, Trump imposed an additional 25% tariff on Indian goods as a "penalty" for purchasing Russian oil, adding to the existing 25% tariffs.

Despite the US stance and the imposition of tariffs, India has not shown any signs of reducing its Russian oil imports. India has defended its decision to import Russian oil, citing it as a matter of national interest and market strategy.

The United States views India's imports of Russian crude as leverage to pressure the Kremlin into ending the war in Ukraine. Oil exports are Moscow's primary source of revenue, and India is the second-largest buyer of Russian oil, after China.

Despite the tough rhetoric, Trump has recently softened his tone, saying that India and the U.S. have a "special relationship" and there is nothing to worry about as the two countries "just have moments on occasion".

Lutnick had earlier said that India would 'say sorry' and seek a trade deal.

Meanwhile, Union Commerce and Industry Minister Piyush Goyal has expressed optimism that the first phase of the India-US trade agreement will be finalized by November 2025. Goyal noted that discussions between the two countries are progressing positively and that both sides are satisfied with the current pace of talks.