Oil & Gas

India is considering the possibility of removing its import tax on American liquefied natural gas (LNG) to increase its purchases of U.S. LNG and reduce its trade surplus with the United States. This move aligns with the country's broader effort to address trade relations and respond to U.S. President Donald Trump's pressure on nations with large trade deficits. India is already exploring options to make U.S. LNG more competitive in its market by eliminating this tax, according to government sources.

Since taking office in January, President Trump has pushed for tariff impositions on countries that have significant trade deficits with the United States, and India is among those nations. The Indian government is weighing this import tax removal under a potential bilateral trade agreement, similar to agreements the country has with the UAE.

This decision is aimed at reducing the trade imbalance and avoiding potential tariffs that could be imposed by the U.S.

To mitigate the growing trade surplus with the U.S., India has expressed intentions to increase its energy imports, including both oil and LNG. India’s Foreign Secretary, Vikram Misri, mentioned in February that the country could boost its energy purchases from the U.S. from the current $15 billion to as much as $25 billion.

These discussions were taking place ahead of a meeting between President Trump and Indian Prime Minister Narendra Modi, with both leaders acknowledging the importance of expanding energy trade.

Indian companies are already engaged in talks with U.S. firms to secure long-term LNG supply agreements. Indian Oil Corporation is negotiating with U.S.-based Cheniere Energy, while GAIL India, the country’s largest natural gas distributor, is revisiting plans to either buy a stake in U.S. LNG export projects or sign long-term offtake contracts.

These steps reflect India's growing interest in strengthening its energy ties with the U.S. as part of a broader strategy to address trade imbalances.