India likely to source 10% of LPG imports from US by 2026: Sources
NEW DELHI: India plans to procure around 10 per cent of its liquefied petroleum gas (LPG) imports from the United States starting in 2026, as part of efforts to expand energy trade with Washington and address the trade imbalance between the two nations, according to four industry sources with direct knowledge of the plans.
Currently, more than 90 per cent of India’s estimated 20.5 million metric tonnes of LPG imports in 2024 come from the Middle East. LPG, a mixture of propane and butane, is mainly used as cooking fuel and is imported by state-run companies Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL). These companies distribute it at subsidised rates to households across the country.
“Traditionally, our LPG imports have come from Gulf countries, but we are now exploring the US as a dependable option,” said one source who declined to be named due to lack of authorisation to speak to the media. “Diversifying supply sources is a critical part of our strategy.”
India had previously avoided large-scale LPG imports from the US due to high shipping costs. However, that began to change in May when state refiners started purchasing US LPG, after China imposed a 10 per cent retaliatory tariff on American propane, making those supplies more appealing to other buyers.
One of the sources noted, “Chinese tariffs have opened a window of opportunity for Indian buyers. US cargoes are now economically viable.” To encourage this shift, New Delhi is considering removing import duties on US-origin propane and butane used for producing LPG, a move that could make American shipments more competitive.
India has pledged to raise its energy purchases from the US by $10 billion, aiming to reach a total of $25 billion in the near future. In February, both countries agreed to pursue a target of $500 billion in bilateral trade by 2030.
The volume of US crude imported by India has already more than doubled this year, according to data shared by the sources.
India typically buys LPG from the Middle East on a free-on-board basis, which leaves the buyer responsible for shipping. “We would prefer to receive US LPG on a delivered basis, similar to how we buy American crude oil,” a second source said.
Two of the sources estimated that India’s LPG imports could grow to 22–23 million tonnes by 2026, with demand rising at 5 to 6 per cent annually.
The Ministry of Petroleum and Natural Gas and the three state fuel companies did not respond to requests for comment.
The International Energy Agency projects India’s LPG demand to grow at an average rate of 2.5 per cent annually through 2030, reaching 1.2 million barrels per day, or approximately 37.7 million tonnes.
