In ‘Historic First’ Deal, India to Source 10% LPG Imports from US in 2026

This development marks a major milestone in India–US energy trade and broader economic relations. Here’s a breakdown of what’s happening and why it matters:

Key Details of the Deal

· Scale and scope: Indian public sector refiners — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) — have together signed a one-year term contract to import 2.2 million tonnes of LPG from the United States.

· Volume significance: This represents roughly 10% of India’s annual LPG imports, making it the first structured contract for US-sourced LPG specifically for the Indian domestic market.

· Suppliers: The awarded suppliers include Chevron, Phillips 66, and TotalEnergies Trading.

Strategic Context

· Trade balance: The move coincides with India’s efforts to narrow its trade surplus with the United States, a long-standing issue in trade negotiations. The surplus has already halved to $1.45 billion (April–October), indicating a shift toward more balanced trade.

· Energy diversification: India traditionally imports LPG from the Middle East (Saudi Arabia, UAE, Qatar, and Kuwait). By sourcing from the US Gulf Coast, India is reducing dependency on West Asia and broadening its energy partnerships.

· Oil and LNG ties: The US is already a key energy partner — the fifth-largest supplier of crude oil and the second-largest of LNG to India. This LPG agreement expands that relationship further.

Policy and Economic Drivers

· Energy security: The deal supports India’s strategy of diversifying energy sources to ensure stable and affordable supplies, especially critical for a country with 88% oil import dependency.

· Domestic policy alignment: A large portion of India’s LPG is subsidized for rural and low-income households to encourage cleaner cooking energy and reduce pollution from traditional fuels such as firewood or kerosene.

· Trade negotiation dynamics: The US had earlier imposed 50% tariffs on Indian goods citing trade imbalances and India’s oil imports from Russia. India’s increasing energy imports from the US could facilitate tariff reductions and advance trade pact discussions.

Broader Implications

· For India: Greater supply stability, price flexibility, and geopolitical balance by reducing over-reliance on any single region.

· For the US: Expanded access to one of the world’s largest and fastest-growing LPG markets, reinforcing its role as a global energy exporter.

· For bilateral trade: A step toward a comprehensive India–US trade deal that could reshape energy and economic engagement over the next decade.

[ABS News Service/18.11.2025]

As India looks to increase its energy trade with the US amid trade pact negotiations, Indian public sector refiners have signed a one-year deal for American liquefied petroleum gas (LPG) imports, marking the first structured contract of US LPG for the domestic market.

The term deal, which Petroleum Minister Hardeep Singh Puri called a “historic first”, is for imports of around 2.2 million tonnes per annum (MTPA) of LPG, close to 10% of India’s annual imports.

It comes at a time when India is looking to shrink its trade surplus with the US — one of the issues flagged by President Donald Trump when he slapped the 50 per cent tariff on incoming Indian goods. Government data released Monday showed that India’s trade surplus with the US had halved to $1.45 billion between April and October.

Trump had also brought up India’s heavy imports of Russian crude oil while imposing the tariffs, which took effect in August. The past few months have seen Indian refiners increasing oil imports from the US. Sources in the Indian government have indicated that India could step up US energy imports to finalise the trade agreement to reduce the tariffs.

On Monday, Puri posted on X: “One of the largest and the world’s fastest growing LPG market opens up to the United States. In our endeavour to provide secure affordable supplies of LPG to the people of India, we have been diversifying our LPG sourcing. In a significant development, Indian PSU oil companies have successfully concluded a 1 year deal for imports of around 2.2 MTPA (million tonnes per annum) LPG, close to 10% of our annual imports—for the contract year 2026, to be sourced from the US Gulf Coast—the first structured contract of US LPG for the Indian market.”

According to industry sources, the three public sector refiners — Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd — have awarded their joint tender for US LPG imports in the coming year to Chevron, Phillips 66 and TotalEnergies Trading. The deal’s commercial details were not available.

LPG is predominantly used as a cooking fuel, with much of India’s requirement being imported from countries like Saudi Arabia, United Arab Emirates, Qatar, and Kuwait. This deal is expected to reduce India’s dependence for LPG on these traditional West Asian suppliers as the country looks to diversify import sources in search of better prices.

A significant chunk of LPG sales to households in India is subsidised by the government. Over the past few years, the government has made concerted efforts to increase LPG penetration by bringing poor and rural households under the LPG net in a bid to cut the use of traditional and polluting cooking fuels.

In February, the US President Trump had said during Prime Minister Narendra Modi’s visit that they had agreed to take steps towards making Washington “a leading supplier of oil and gas to India”, which could help bridge the trade deficit. Trump had added that the US will “hopefully” be India’s top oil and gas supplier.

In September, Commerce Minister Piyush Goyal had said the US would play an important role in India’s energy security going forward.

India is the world’s third-largest consumer of crude oil with an import dependency of around 88 per cent. The country is also among the biggest importers of liquefied natural gas (LNG), with around half of its natural gas demand being met through imports.

For the past few years, the US has been the fifth-largest supplier of crude oil to India. It has also been the second-largest supplier of liquefied natural gas (LNG) to India. As for LPG, over 60 per cent of the petroleum fuel’s requirement in India is met through imports.

Trump said last week that the US will bring down tariffs on India, and that they are close to signing a trade deal.