Modi-Trump Meeting: India to Increase Oil and LNG Imports from US to Bypass Tariffs

India is working to enhance its oil and gas imports from the United States to help address the trade imbalance between the two nations and mitigate the risk of retaliatory tariffs.

According to Foreign Secretary Vikram Misri, India has already purchased approximately $15 billion worth of US energy exports, and this figure could potentially increase to $25 billion. Speaking at a media briefing in Washington following Prime Minister Narendra Modi’s meeting with President Donald Trump, Misri emphasized that higher energy imports could play a role in reducing the trade deficit between India and the US.

During the India Energy Week conference in New Delhi, state-owned companies expressed interest in acquiring more US crude oil and liquefied natural gas (LNG). Indian Oil Corporation is currently in discussions with Cheniere Energy Inc. for a long-term LNG supply agreement, while Gail India Ltd has revived its plans to invest in a US liquefaction facility, according to Chairman Sandeep Gupta.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Oil Imports in India

In 2021, India was the largest importer of US crude, purchasing around 406,000 barrels per day, which accounted for 14.5% of total US oil exports, based on data from Kpler. However, this volume declined to 221,000 barrels per day last year as Indian refiners opted for discounted Russian crude. With recent US sanctions disrupting supply chains from Moscow, India— the world’s third-largest oil consumer—is now seeking alternative sources.

The US is India’s second-largest trading partner after China, with bilateral trade reaching $82.5 billion between April and November 2024. However, India’s exports to the US amounted to $52.9 billion, while imports stood at $29.6 billion, creating a trade gap that could invite retaliatory measures from Washington.

The Way Ahead

Initially optimistic about the Trump administration, India now faces concerns over a potential trade conflict and restrictive immigration policies. In an effort to prevent trade sanctions, the Indian government has offered concessions, including reducing import tariffs and gradually eliminating additional levies on imported goods.

President Trump, addressing the issue on Thursday, stated that Modi has agreed to initiate negotiations to reduce the US trade deficit. Trump also attributed the implementation of retaliatory tariffs to what he described as India’s high import duties.