India Signs Major US LPG Deal as Economy Hits Fastest Growth in Years

India has taken a significant step toward diversifying its energy sources by signing a one-year liquefied petroleum gas (LPG) supply agreement with the United States, officials announced on Monday. The deal, sourcing 2.2 million tonnes per annum from the US Gulf Coast, is expected to meet close to 10% of India’s annual LPG imports and marks the first structured US LPG contract for the Indian market.

Petroleum and Natural Gas Minister Hardeep Singh Puri emphasized the strategic importance of the agreement, noting that it opens one of the largest and fastest-growing LPG markets globally to the United States. “In our endeavour to provide secure, affordable supplies of LPG to the people of India, we have been diversifying our sourcing,” Puri said, highlighting India’s efforts to reduce dependence on a single source.

This development comes amid ongoing trade tensions with the US. Relations between Washington and New Delhi hit a rough patch in August when President Donald Trump imposed 50% tariffs on Indian goods, citing concerns that India was indirectly supporting Russia’s war in Ukraine by purchasing discounted oil. Despite these disputes, negotiations continue on multiple fronts, including agricultural trade and energy imports.

India’s energy diversification aligns with broader policy moves. In October, HPCL-Mittal Energy, a state-backed refiner, stopped purchasing Russian crude following US sanctions, while Reliance Industries is evaluating the implications of restrictions imposed by both Washington and the European Union.

The LPG agreement coincides with encouraging signs for India’s economy. The country, the world’s fifth-largest by nominal GDP, recorded its fastest growth in five quarters in the three months ending June 30, bolstered by increased government spending and improved consumer confidence. However, economists caution that US tariffs could cut between 60 and 80 basis points from GDP growth if no relief is provided.

Industry analysts say the US LPG deal is both a strategic and economic win for India. It secures a stable supply for the fast-growing domestic market, reduces vulnerability to geopolitical tensions, and strengthens India’s negotiating position in global energy trade.

As India navigates the complex landscape of trade disputes, sanctions, and a recovering economy, the LPG agreement symbolizes a pragmatic approach to energy security and international collaboration. With ongoing talks between New Delhi and Washington, stakeholders are closely watching how this deal will shape trade dynamics and energy partnerships in the coming year.