Kamal Ghorui
The Donald Trump administration may go ahead and refund India for small amounts of penalties it may have collected for the 25% tariff related to imports of Russian crude oil. The US could return a portion of the penalty levied on India for importing Russian crude oil in cases where the shipments were after February 7, the date on which President Donald Trump’s executive order removing the additional 25% duty on Indian imports related to such purchases came into effect.The exact size of any potential refund remains uncertain. One person familiar with the matter told ET that the refund would apply only to a limited number of transactions where tariffs may have already been collected before the order became effective, even though the actual imports happened after midnight on February 7. This is a transitional arrangement rather than a broader policy change.On Saturday, India and the United States announced an interim trade framework that reduced tariffs on Indian exports to the US to 18%. The arrangement is intended to pave the way for a bilateral trade agreement, with the interim deal addressing tariff reductions and non-tariff barriers, while a wider legally binding agreement is expected to cover goods, supply chains and digital trade.Separately, through another executive order, the US scrapped the additional 25% tariffs imposed on India over purchases of Russian oil from February 7 onward, while adding that it would continue to observe whether India resumes direct or indirect imports of Russian crude.In an executive order issued on February 6, the Trump administration said that Indian goods entering the US for consumption, or released from warehouses for consumption, on or after 12:01 a.m. Eastern Standard Time on February 7, 2026, would no longer be subject to the additional 25% ad valorem duty previously imposed.The order also clarified that if its implementation results in duties having been collected that must be returned, such refunds would be handled in accordance with applicable laws and the established procedures followed by US Customs and Border Protection.The reciprocal tariff rate is expected to be lowered to 18% from 25% once a related executive order is formally issued by the US.Another person familiar with the matter noted that the executive order does not indicate any retrospective application, adding that the final trade agreement is likely to include provisions dealing with dispute resolution at a later stage.Ajay Sahai, director general of the Federation of Indian Export Organisations, said the executive order removing the additional tariff refers to provisions allowing refunds for duties collected while the higher levy was in force. However, he pointed out that the detailed legal and procedural framework for claiming such refunds has not yet been fully clarified. According to him, while the US intends to permit refunds for duties collected during that period, uncertainty over the process and timelines has created concern among exporters.A trade expert explained that the withdrawal of duties applies only prospectively, meaning it covers Indian goods entering the United States from 12:01 a.m. EST on February 7 onward. In certain cases where duties were imposed even after the order took effect, those amounts may be eligible for refund to importers.
