India Signs Significant LPG Supply Agreement with the United States

India has signed a significant annual agreement with the United States to secure approximately 10% of its LPG supply. This move has been described as an important step toward the sustainable diversification of India’s energy sources.

Earlier, in August, relations between the two countries had become tense after U.S. President Donald Trump increased tariffs on India by up to 50%. Tensions further escalated when U.S. officials accused India of indirectly supporting Russia’s war in Ukraine.

President Trump claimed that Indian Prime Minister Narendra Modi had agreed to cut imports of Russian crude oil as a precondition for a potential trade deal, though India has not formally confirmed this claim. Despite disagreements over issues like agricultural trade and Russian oil purchases, discussions between New Delhi and Washington have continued.

Meanwhile, India’s Petroleum and Natural Gas Minister Hardeep Singh Puri announced that an annual structured agreement to supply 2.2 million tonnes of LPG from the U.S. Gulf Coast has been finalized. According to Puri, this is the first such agreement between India and the United States in the LPG sector.

In a statement, Minister Puri said, “India is continuously diversifying its sources to provide safe and affordable LPG to its citizens. The world's largest and fastest-growing LPG market, the U.S., is now officially open to the Indian market.”

In October, following U.S. sanctions, HPCL-Mittal Energy suspended crude oil purchases from two major Russian companies. Similarly, a major private Indian buyer, Reliance Industries, has indicated it is assessing the potential impact of U.S. and European Union sanctions.

India, the world’s fifth-largest economy, recorded its fastest economic growth in five quarters during the fiscal quarter ending June 30, with increased government spending and improved consumer confidence as key contributors.

However, the increase in U.S. customs duties continues to exert pressure on India’s overall economy. Economists estimate that unless a discount or agreement is reached soon, India’s GDP growth rate for the current fiscal year could weaken by 60-80 basis points.