The Trump Administration’s ongoing obsession with India’s purchase of Russian oil, which has attracted an additional punitive tariff of 25%, making the total tariff 50% on most Indian imports into the U.S., is inexplicable.[1] India and the U.S. are Comprehensive Global and Strategic Partners, and U.S. President Donald Trump calls India’s Prime Minister, Narendra Modi, his “good friend”. The U.S.’s biggest rival, China, is the largest global buyer of Russian oil, and the European Union continues to import Russian gas. Still, neither has been penalised as much as its friend and QUAD partner, India.
India, being caught in the crosshairs of a geopolitical rivalry between the U.S. and Russia, is not new. A similar competition took place 125 years ago, when, between the 1890s and 1905, British India made large purchases of Russian kerosene. Kerosene was commonly used worldwide for lighting and cooking.[2] Other oil products, such as machine oil, lubricants, pitch, and asphalt, were also exported into India via Russia; however, kerosene dominated the domestic energy market.
America had been exporting kerosene to British India a decade ahead of Russia. According to The Gazetteer of Bombay City And Island (1909), ‘America, which chiefly supplies kerosene oil, and which possessed practically no trade in Bombay till 1879-80,’ acquired a significant share in successive decades due to its kerosene exports. [3]
At the time, Russian kerosene exports to India faced non-tariff barriers due to Great Britain’s preference for friendly countries, such as the U.S. and its other overseas colonies. Despite this, Russian kerosene, because of its competitive price, dominated the Indian market for two decades (See graph.) – as its crude oil does now. In return, Russia became the second-largest buyer of Indian tea after Great Britain by 1905.[4]
The trade was a natural to expand, except that there was no Russian diplomatic mission in Bombay.
The two powers reached a quid pro quo in 1876: Great Britain would set up a consulate in Tiflis (present-day Tbilisi, the capital of Georgia) in exchange for a Russian consulate in Bombay. But the proposed arrangement never fructified. Russia’s sudden annexation of the Central Asian Khanate of Kakanda (a kingdom that is now part of Uzbekistan) brought its army uncomfortably close to Herat, the gateway to Afghanistan, then a buffer zone for British India.
This was at the height of the Great Game of espionage, secret missions, and proxy conflicts unfolding in Central Asia, being played between Imperial Russia and Great Britain. Britain viewed Russia’s expansion in Central Asia as a preparation for the invasion of British India. Its suspicions were well-founded: From the 1860s, numerous emissaries sent by Indian kingdoms travelled to Tashkent (capital of today’s Uzbekistan), later Ashgabat (capital of today’s Turkmenistan), both then part of Imperial Russia, seeking Russian help to overthrow the British in India. The last one was Sikh Maharaja Duleep Singh, who was exiled and resided in Moscow from 1887 to 1888 while awaiting a reply from Tsar Alexander III for his plan to overthrow the British in India.[5]
Image credits: Peter Bance Collection
This resulted in Britain’s preference for the U.S. as a trading partner. The two had become allies when the Most Favoured Nation status was bestowed on America after the bilateral signing of the Treaty of Paris (1783).[6]
Bombay was the primary port for energy imports from the U.S. and Russia. The first consignment of Russian kerosene came in 1886, facilitated by the trading house of Lane & McAndrews.[7] From the city, kerosene was distributed not only across western India but also transhipped to the Gulf kingdoms, Oman & Muscat, Ottoman Iraq, and Qajar Persia, over which the British then held sway. [8] A Bombay merchant Hajji Alliana Memeni, became the largest exporter of Russian kerosene from Bombay and Karachi to Basra, the main port for Ottoman Iraq. He shipped kerosene aboard the steamers of the British Steam Navigation Company, charging between 2.36 and 3.15 roubles, which was Rs. 3.75 per crate of Russian kerosene when the price of a direct shipment from Batumi or Odessa would be 1.80 to 2 roubles.[9] Russia had a big stake here and sought to open a consulate general in Bombay. It wanted to bypass intermediaries like Memoni and British trading firms like Marcus Samuel & Co.[10], gather local market intelligence to promote Russian manufacturers,[11]and monitor Central Asian Muslims who travelled overland to board ships for Mecca and Medina from Bombay. The U.S. already had a consulate in the city as early as 1838.[12]
Unfortunately, Russia was not a significant trading partner of British India until the late 1880s, when Russian kerosene exports began and the simultaneous increase in Indian tea imports to Russia occurred. This late entry into the Indian energy market was the result of the geographical location of its oil reserves. All Russian kerosene production was then concentrated in the city of Baku (capital of today’s Azerbaijan) and the Absheron Peninsula on the Caspian Sea. Connectivity from here to the Black Sea port of Batumi was dismal until a pipeline was built in 1879 and rail connectivity was introduced; the output was poor due to primitive refining technology. A turning point in the fortunes of this industry arrived in 1872, when the Russian government reversed its earlier policy of leasing out oil deposits and began encouraging foreign investments.[13]
Instead, it auctioned its oil reserves to private investors, including foreigners, and removed the special tax on kerosene. The next year, Robert Nobel, older brother of Nobel Prize founder Alfred Nobel and son of arms manufacturer Immanuel Nobel, established an oil company, Branobel,[14] by acquiring a refinery in Baku. A combination of the Russian government building a railway line from Baku to Batumi, from where kerosene was exported to Europe, Africa, and India, and innovations by Branobel in introducing tanker wagons to carry their product to the port, resulted in kerosene exports growing to 7% of Russia’s GDP in 1901.[15] [16]
The popularity of Russian kerosene among Indians was largely due to this lower cost compared to American kerosene of comparable quality. American kerosene continued to be used, despite its higher price, for lighting street lamps in the city and among the English and expatriate residents. By 1897-98, Russian kerosene accounted for 60% of total imports (84,504 thousand gallons) into India, while American kerosene at 28% was half of that. Russian kerosene peaked at 80% of total Indian imports, which totaled 104,930 thousand gallons in 1902-03, while American kerosene plummeted to just 5.5% of the market share that year.[17][18] [19]
Image credits: The Tontine Coffee-House
In 1898, the Armenian Alexander Mantachev, a Russian oil magnate from Baku, opened a representative office in Bombay – Leon Mantachev & Co. Mantachev, along with the Nobel and the French Jewish Rothschild family, were the wealthiest Baku oil magnates at the turn of the 20th century. Their attempts in 1894 to work out an arrangement with America’s Standard Oil, to divvy up the global markets based on the allocation of quotas and regions, and eliminate fierce competition with the Americans, were rejected by Russia’s foreign minister, Sergei Witte, as prejudicial to Russia’s interests.[20]
Finally, on 22nd November 1900, the Imperial Consulate of Russia in Bombay was opened. This was made possible by two crucial events: In December 1890, Nicholas II, the first Russian Tsar to visit India, began his royal visit when his ship anchored in Bombay. The tour was intended as an educational visit for the crown prince. The grand receptions in his honour across India left a positive impression.
Image credits: The Telegraph Picture
Secondly, the signing of the Pamir Boundary Commission Protocols (1895) between Imperial Russia and Great Britain resolved the border issue between Russian Turkestan and Afghanistan in the Pamir region. By doing this, it prevented the likelihood of a direct military confrontation between the two powers.[21]
The appointment of the first Russian consul in Bombay, Wilhelm Oskarovich Klemm, overcame numerous hurdles. With his help, two steamship lines began operating in 1902 between Indian ports and Russian ones, notably with Odessa and Batumi in the Black Sea as well as in the east with Vladivostok. Russian trading houses, such as Gubkin & Kouznetsov, made voluminous tea purchases in Calcutta and Bombay. Finally, in 1905, the status of the Russian consulate in Bombay was elevated to that of a consulate general, which expanded the territorial mandate of Consul General Klemm.
Suspicions between Britain and Russia never ceased entirely. During Consul Klemm’s tenure, a tariff war between British India and Russia almost broke out. Russia imposed an increased tariff on the import of Indian teas at Vladivostok, which raised a demand from Indian merchants for punitive tariffs on Russian kerosene imports and a preference for American imports. British authorities were reticent to retaliate because it would impact British trading houses dealing in Russian kerosene.
By 1905, Russian oil imports to India began to decline rapidly due to a popular revolt against Tsar Nicholas II, which unsettled the economy and led to the October Manifesto, which established a constitutional monarchy. The oil industry was plagued by labour unrest, impacting oil production in Baku. The misfortunes of Russia were an opportunity for America in India. American oil exports to India recovered dramatically, accounting for an average of 25% of total Indian imports. Russian kerosene exports to India declined, but continued until the Straits of Dardanelles were blocked temporarily during the Great War in 1914.
Russian oil never entirely ceased to be present in the Indian market, even after the Bolshevik Revolution of 1917, although productivity was severely impacted by the nationalisation of oil companies. It also became more expensive as newer and cheaper sources of oil emerged.
India’s purchases, as this history demonstrates, were deeply impacted by the geopolitics of the day, much as they are today. Indian public sector oil companies have reduced their purchases of cheaper Russian oil, but ultimately, it will depend on how much pain the Indian economy can endure. Purchasing cheap oil makes economic sense today, just as it did in the past.
Sifra Lentin is Fellow, Bombay History, Gateway House.
This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read exclusive content here.
Support our work here.
For interview requests with the authors, or for permission to republish, please contact outreach@gatewayhouse.in.
© Copyright 2025 Gateway House: Indian Council on Global Relations. All rights reserved. Any unauthorised copying or reproduction is strictly prohibited.
References:
[1] From 1 October 2025, a 100% tariff on branded pharmaceutical drugs imported from India will kick in.
[2] Petrol was considered too inflammable a fuel to use until the internal combustion engine was popularised with the introduction of the economical 1913 Ford T model.
[3] S.M. Edwardes, The Gazetteer of Bombay City and Island Volume 1 (Pune, The Government Photozinco Press, Reprint 1977), p.419.
[4] I.V. Kryushkov, Natalia D. Kryushkova, et. all, editors, Foreign Trade of British India at the turn of the 19th-20th centuries (Based on materials from Russian Diplomatic Missions) Vol. 15, Issue 2 (Kalmyk, Oriental Studies, 2022), p. 208.
(Machine translated by Google.)
[5] Mohanty, Arun, Tracing Indo-Russian Diplomatic History (New Delhi, Manohar, 2019) pp 53-67.
[6] Lentin, Sifra, Breaking the ice: US trade with Bombay.
https://www.gatewayhouse.in/breaking-the-ice-u-s-trade-with-bombay
[7] Gerali, Francisco, Chronology of the early Russian Petroleum history (2020)
https://ethw.org/Chronology_of_the_early_Russian_petroleum_history
[8] The English East India Company’s port of Bombay was not just an entry point for large volumes of kerosene; its docks boasted voluminous storage tanks for this product.
[9] Masha Kirasirova and Eileen Kane, Russian and Soviet Oil Exports to the Persian Gulf (1903–1933), in: Russian-Arab Worlds, edited by Eileen Kane, Masha Kirasirova, and Margaret Litvin (Oxford University Press, 2023), p.139.
[10] The French Rothschild family had a stake in the trading house of Marcus Samuel & Company, and through them, they exported Baku kerosene to India. The Rothschilds’ investments in Baku oil fields and refineries were enormous. They were one of the big three oil magnates of Baku, alongside Nobel and Mantachev.
[11] Russia sought to promote its textiles and tableware in the Indian market, but lacked market intelligence regarding the needs and price sensitivity of the Indian market.
[12] Lentin, Sifra, Mercantile Bombay: A Journey of Trade, Finance and Enterprise (New Delhi, Routledge India, 2022), p. 106.
[13] Baku and its surrounding region continue to remain a major oil production centre. India’s ONGC Videsh has invested $1.2 billion here.
[14] The acronym Branobel stands for Petroleum Production Company Nobel Brothers Ltd.
[15] Masha Kirasirova and Eileen Kane, Russian and Soviet Oil Exports to the Persian Gulf (1903–1933), in: Russian-Arab Worlds, edited by Eileen Kane, Masha Kirasirova, and Margaret Litvin (Oxford University Press, 2023), p.132.
[16] Branobel was the first to introduce its own tanker ships a prototype for today’s oil tankers, as opposed to shipping kerosene in tin cans like the Americans, which substantially reduced the price of the Russian product. It’s first tanker was ‘Zoroaster’ a reference to the Zoroastrian religion’s prophet who is believed to have hailed from this region and whose followers build fire temples over the legendary eternal fires of Baku caused by gas and oil surface seepages.
[17] Dasgupta, Biplab. The Oil Industry in India: Some Economic Aspects. Taylor & Francis, 2023, pp. 17-20, 42.
[18] This period coincided with the entry of kerosene and oil products from British Burma into the Indian market. Burmese kerosene soon turned out cheaper compared to foreign kerosene imports.
[19] By the decade ending 1889-90 and 1906-07, Russia was counted amongst Bombay’s sizeable overseas trading partners after Great Britain, France, Italy, Austria-Hungary, Germany, and Japan, primarily on the strength of its kerosene imports, which were Rs 12 lakhs and Rs 72 lakhs respectively. This was much the same for America, which, according to The Gazetteer of Bombay City And Island (1909), had practically no trade with Bombay but ‘now chiefly supplies kerosene’ since 1879-80.
S.M. Edwardes, The Gazetteer of Bombay City and Island Volume 1 (Pune, The Government Photozinco Press, Reprint 1977), p.419-20.
[20] Witte’s grounds were that, given its terms, “the Russian kerosene producers may possibly receive, for the time being, some profit from the bargain, but they would give themselves over into the hands of the Americans, and the independence of the Russian naphtha [petroleum] industry, which has a great future, would suffer.”
Masha Kirasirova and Eileen Kane, Russian and Soviet Oil Exports to the Persian Gulf (1903–1933), in: Russian-Arab Worlds, edited by Eileen Kane, Masha Kirasirova, and Margaret Litvin (Oxford University Press, 2023), p. 133.
[21] It was the Anglo-Russian Convention of 1907, a treaty that delineated spheres of influence in Persia (dividing it into Russian, British, and neutral zones), neutralized Tibet, and recognized Afghanistan as a British protectorate, with Russia renouncing direct interference in its affairs. The foundations of this Treaty were the Pamir Boundary Commission Protocols (1895), an agreement that delimited the border between Russian Turkestan and Afghanistan in the Pamir region, resolving territorial disputes in the Hindu Kush and preventing direct military confrontation there; and, the Anglo-Russian Agreement on Persia (1900), a preliminary pact on trade and railway concessions in Persia, which helped de-escalate economic competition here. These treaties with the 1907 Convention, collectively ended the era of espionage, proxy conflicts, and border skirmishes that defined the Great Game.