India-US LPG Import Deal

In a significant development, Indian oil public sector undertakings (PSUs) have finalized a one-year contract to import approximately 2.2 million tonnes of liquefied petroleum gas (LPG) from the United States. This marks the first such contract between the two nations and comes at a time when India and the US are moving closer to a bilateral trade agreement.

Contract Details and Significance

• The LPG import from the US Gulf Coast for the contract year 2026 will constitute nearly 10% of India's annual LPG imports.
• This initiative is part of India's broader strategy to balance its trade surplus with the US, with energy being a pivotal sector in future trade agreements.
• The deal is benchmarked using Mount Belvieu prices, following negotiations by Indian Oil, BPCL, and HPCL officials with US producers.
• India is currently import-dependent for about 60% of its domestic LPG needs, with 90% of imports originating from West Asian nations.

Energy Security and Trade Strategy

Union Minister emphasized that this contract further strengthens India's energy security and ensures affordable access to clean cooking fuel for millions of households. In addition to LPG, India is also increasing its crude oil imports from the US, with October marking the highest level since March 2021.

Growing Energy Ties

• The increasing share of US oil in India's crude basket highlights the deepening energy relationship between the two countries.
• India's strategy focuses on balancing supply security, economic viability, and geopolitical considerations, with the US expected to play a larger role in India's imports of crude oil, LNG, and LPG.

Rising LPG Consumption and Government Initiatives

India's LPG consumption has grown by 7% year-on-year in 2025-26, driven by government schemes like the PM Ujjwala Yojana, which offers subsidized LPG cylinders. Despite a 60% surge in international prices last year, Indian oil marketing companies have maintained affordable prices for consumers, supported by government expenditure of over ₹40,000 crore.

• Ujjwala beneficiaries continue to receive LPG cylinders at subsidized rates of ₹500-550, compared to the actual cost of over ₹1,100.