Blitz Bureau
India is considering a proposal to scrap import tax on US liquefied natural gas (LNG) to boost purchases and help cut the trade surplus with Washington, a key irritant for US President Donald Trump, four government and industry sources said, according to a Reuters report.
The United States is India’s second biggest supplier but the two sides are looking to ramp up volumes for India’s energy-hungry economy, one of the fastest growing in the world. Qatar is the top LNG supplier to India.
During Prime Minister Narendra Modi’s US visit last month, India had pledged to increase US energy purchases by $10 billion to $25 billion in the near future, while both leaders agreed to target $500 billion in bilateral trade by 2030.
Scrapping the import tax would make US LNG more price competitive, and help trim India’s trade surplus with the US, another Government source said. The surplus totalled $45.4 billion last year.
“We are considering ending the imports tax on US LNG under the bilateral trade agreement, similar to our model with the UAE,” one of the sources familiar with the matter said.
India imposes a 2.5 per cent basic customs duty and an additional 0.25 per cent social welfare tax on LNG, but the tax is not levied on supplies from the United Arab Emirates (UAE) and Australia under bilateral agreements.
The sources spoke on condition of anonymity due to the sensitivity of the talks. The oil and finance ministries did not immediately respond to emailed requests for comment.
Unlike Canada and the European Union, India is actively seeking to appease the Trump administration as it ratchets up pressure on trading partners, and is open to cutting tariffs on over half of US imports worth $23 billion.
Also, China’s 15 per cent import tax imposed last month on LNG imports from the US could divert trade of the super-chilled fuel to India, where the International Energy Agency expects a 60 per cent jump in gas use between 2023 and 2030, with imports of LNG doubling over that period.
Big LNG buyer
India, the world’s fourth-biggest LNG importer, imported 25.9 million tonnes of LNG worth about $14.2 billion in the first 11 months of the current fiscal, Government data showed.
LNG imports are on track to average about 27-28 million tonne in this fiscal, with US supplies accounting for 20 per cent-25 per cent of that, a third source said.
India’s US LNG imports are driven by state-run GAIL (India) Ltd’s long term deals with US companies to buy 5.8 million tons of LNG annually.
GAIL has also said it would revive plans to buy a stake in a US LNG plant or secure a long-term US LNG deal after Washington lifted a ban on export permits for new projects, part of Trump’s agenda to maximise US energy development.
Indian companies including GAIL, Indian Oil Corp, and Bharat Petroleum Corp are talking to US companies for additional LNG sourcing, Oil Secretary Pankaj Jain said last month.
The Oil Ministry has asked companies to raise energy imports, wherever possible, a Government source said.
Apart from LNG, India can also raise US imports of petrochemicals, ethane, propane and butane, the source said.
