India File is published every Tuesday. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here.

Oct 28 - By Nidhi C Sai, Editor Online Production, with global Reuters staff

U.S. and EU sanctions on Russia's top oil producers have heaped pressure on India's refiners, especially Reliance Industries RELI.NS.

The golden run of discounted Russian barrels that boosted their profits and margins may be coming to an end. Can they cope with the new reality? That's our focus this week.

And, Reliance is also rushing to ship battery component orders out of China. Scroll down for more on that.

THIS WEEK IN ASIA

Trump praises Japan's 'great' female leader in talks on trade, critical minerals

As Trump-Xi trade talks near, investors turn to history as a guide

China and ASEAN, hit by US tariffs, sign upgraded free trade pact

Luxury brands turn on the charm in China to kindle nascent spending recovery

Robot dogs and AI drone swarms: How China could use DeepSeek for an era of war

SCOUTING FOR NEW SUPPLY SOURCES

The latest U.S. sanctions on Russia's top energy producers Rosneft ROSN.MM and Lukoil LKOH.MM have put Indian refiners in a bind.

For the past three years, India's oil processors have thrived on discounted Russian barrels that boosted their refining margins, profits, and share prices. Now, as the U.S. and Europe tighten curbs on Moscow's exports, those windfall gains may fade.

New Delhi has so far publicly resisted U.S. pressure to halt buying Russian oil, arguing that it was vital to its energy security. But it is now weighing whether trimming Moscow's barrels could buy relief from President Donald Trump's 50% tariffs on India's goods exported to the U.S.

That has left the refiners exposed, but at least for now, they are putting up a brave front.

Reliance, India's largest refiner, said it will "address these conditions while maintaining relationships with its suppliers".

The company, which has a long-term deal to buy nearly 500,000 barrels per day from Rosneft, is reassessing those arrangements after Washington's move. The U.S. has given companies until November 21 to wind down transactions with Rosneft and Lukoil.

Reliance plans to stop importing oil from Rosneft and is scouting for alternative supplies from the Middle East and Brazil.

State-run refiners, including Indian Oil IOC.NS, Bharat Petroleum BPCL.NS and Hindustan Petroleum HPCL.NS, are poised to sharply cut Russian oil supplies.

With discounts on Russian barrels already shrinking from as much as $25 to barely $2-$2.50 a barrel due to Ukraine's attacks on Russia's oil infrastructure, India's refiners face a squeeze on the margins that powered their robust profits. Costlier Middle Eastern or Brazilian supplies will lift input costs, especially for private players such as Reliance whose pricing is aligned to global benchmarks.

Reliance's imports from Rosneft account for a major portion of India's Russian oil purchases, and its Jamnagar complex is one of the few capable of processing a wide range of crude grades.

"Any hit to Russian supplies will increase its participation (in the spot market) and that would tighten the spot market and raise prices. They are a giant player," said Tushar Tarun Bansal, senior director at oil consultancy Alvarez and Marsal.

The ripple effect could raise India's import bill, tighten competition for similar grades in Asia, and strain fuel pricing at home.

"While India can substitute purchases from Russia with suppliers from the Middle East and other regions, the import bill for crude oil would increase," said Prashant Vashisth, vice president at Moody's affiliate ICRA Ltd.

Read this commentary by Reuters' Ron Bousso on how Trump's India squeeze will push Russian oil further into the shadows.

RACING AGAINST SANCTIONS DEADLINES

The European Union's new rule, which bans imports of fuel refined from Russian crude processed within 60 days of shipment, adds another layer of complexity. Europe accounts for a large chunk of Reliance's diesel and aviation fuel exports.

Meanwhile, a White House official said that Indian refiners are already cutting Russian oil imports by 50%. Indian sources said the cut was not yet visible, though it could show up in import numbers for December or January.

Refiners had already placed orders for November loading that included some cargoes for December arrival, multiple sources said.

For now, refiners are expected to keep some barrels flowing through intermediaries. But as sanctions tighten and the EU's January 21 deadline approaches, even indirect trade could become riskier.

Can the Indian refiners ride out this rough phase? Write to me at nidhi.csai@thomsonreuters.com

The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here.

MARKET MATTERS

Rattled by nearly $17 billion in foreign outflows this year, India is fast-tracking financial reforms to shore up investor confidence and strengthen its banking and capital markets.

The government and regulators are rolling out reforms to ease capital access, attract overseas funds, and boost domestic participation.

India is planning to allow direct foreign investment in state-run banks of up to 49%, more than double current limits, a source said.

Foreign investors have sold nearly $17 billion net in Indian equities this year, making India the worst-hit Asian market in terms of foreign portfolio withdrawals.

Read this in-depth analysis by Reuters journalists Jayshree P Upadhyay, Jaspreet Kalra and Gopika Gopakumar.

THIS WEEK'S MUST-READ

Apart from scrambling to rejig its Russian oil contracts, Reliance Industries is now facing another challenge - this time from China.

Mukesh Ambani's conglomerate is rushing to ship battery component orders out of China before Beijing's new export curbs take effect on November 8.

A Reliance team has travelled to China to speed up the process, amid uncertainty over how strictly Beijing will enforce its widening export-control regime. The new rules require companies to seek approval before exporting battery-manufacturing equipment - part of China's bid to protect its dominance in the global electric battery industry.

Read this exclusive report by Reuters journalists Lewis Jackson and Aditi Shah.

(Reporting by Nidhi C Sai; Editing by Muralikumar Anantharaman)

((Nidhi.CSai@thomsonreuters.com; +91 70456 55251))