A man pushes a tricycle loaded with LPG cylinders on the road below Adani signage in Mumbai. The allegation of fraud by Adani Enterprise brought by US firm Hindenburg Research has sparked a political debate in India by opposition parties.
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India is increasing its energy imports from the United States in a bid to reduce its trade surplus with Washington, a key demand of the Trump administration during trade negotiations with New Delhi.
On Monday, Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas, announced a deal that will see the United States supply nearly 10% of New Delhi’s liquefied petroleum gas (LPG) imports.
Indian state oil companies have signed a one-year deal to import around 2.2 million tonnes annually of LPG from the US Gulf Coast, he said in a post on X, calling it “a historic first”.
This would be the “first structured US LPG contract for the Indian market” and purchases would be based on “Mount Belvieu as a benchmark for LPG purchases,” he said.
“We believe this move is aimed at diversifying our LPG sourcing, which is currently concentrated in the Middle East, and also to reduce the trade surplus with the United States,” Nomura energy stock analyst Bineet Banka told CNBC in an email response.
India’s total LPG imports are around 20-21 million tonnes annually, he said, adding that if 10% of that supply comes from the US, at current prices, it implies an incremental import of $1 billion from the US. Although Banka said the incremental imports are “not much” compared to India’s $40 billion trade surplus with the US.
Since August, ties between the United States and India have been strained after Washington imposed a 50% tariff on Indian goods. Reciprocal tariffs of 25% were imposed on Indian products as part of a broad strategy to address trade imbalances and boost domestic industries, while the other 25% was due to India’s import of Russian oil.
Energy trade between the United States and India deepens
In September, President Donald Trump doubled down on his criticism of India, calling trade ties with the country “a totally one-sided disaster!”
That same month, Indian Commerce Minister Piyush Goyal, who was in the United States for trade negotiations, reportedly said that India will increase its trade in energy products with the United States in the coming years.
“And being close friends, natural partners, our energy security objectives will have a very high element of American participation,” the Indian minister had said.
Both sides have since softened their stances, with Trump recently evoking memories of his last visit to India and referring to Prime Minister Narendra Modi as “his friend” and a “great man” while addressing reporters at the White House on Nov. 6.
The US president also said that India “has largely stopped buying Russian oil”, a fact that is not yet supported by data.
According to data shared by tanker tracker Kpler, as of November 17, Indian imports of Russian crude oil remain at a relatively high level of 1.85 million barrels per day, compared to 1.6 mbd in October.
“With buyers having until November 21 to close transactions with Rosneft and Lukoil, Indian refiners are expected to rush to bring in as many barrels as possible in the coming days,” said Kpler’s Muyu Xu.
But he added that Indian imports of US crude oil “saw a sharp rise in October, reaching 568 kbd (thousands of barrels per day), the highest level since February 2021.”
India imports around 5 million barrels a day of crude oil, according to data from Nomura, which predicts the total impact on the import bill will be around $1.1 billion, assuming the Russian mix’s 35% share this year is reduced to 15% and taking into account an average Russian crude discount of $3 per barrel.
Impact on the Indian economy
Experts are divided on how this change in energy mix will affect India’s economy.
According to Nomura’s Asia Economics team, “India could also benefit if this change [away from Russian crude imports] leads to a trade deal with the United States and reduced tariffs.” The company assumes that the 25% Russian penalty “will be eliminated after November, while the 25% reciprocal tariff will remain in place until FY26.”
But Rystad Energy’s Pankaj Srivastava warns that India’s import bill is expected to rise.
“With the thawing of US-India relations, the reduction of tariffs and the planned expansion of refineries in 2026/2027 along with petrochemical plants, the import bill is expected to increase unless India substantially increases domestic production,” Srivastava, senior vice president of commodity markets at Rystad, told CNBC.
