India May Remove Import Tax on U.S. LNG to Boost Energy Trade
India is considering removing import taxes on U.S. liquefied natural gas (LNG) to enhance energy imports and address its trade surplus with the U.S. The move aims to make American LNG more competitive and strengthen bilateral trade ties.
kowshik Reddy
India has weighed the possibility of dropping the import tax on liquefied natural gas from the U.S. For boosting energy imports and reducing its trade deficit with the U.S., this move also fits in with India's larger agenda of enhancing energy security while strengthening economic ties with one of its larger trading partners.
India ranks fourth in terms of LNG imports worldwide, and demand is rising along the course of India's ever-expanding economy and increasing energy needs. The U.S. accounts for 20%-25% of LNG imports into India, and the relaxation of import tax on LNG could make American LNG imports much more competitive in the Indian market. Such an avenue would benefit India in getting more long-term supply contracts from the U.S. and diversifying its other suppliers.
The initiative resonates with the commitments reached during Prime Minister Narendra Modi's recent U.S. visit, which included talks on increasing bilateral trade, especially energy. Meanwhile, Indian energy firms such as GAIL are pursuing further arrangements with U.S. suppliers for medium- to long-term imports of LNG at reasonable prices.
In case the policy is adopted, this would tremendously favor U.S. LNG exports to India, thereby helping India’s aim of doubling natural gas consumption by 2030. This is a truly win-win opportunity: India will be able to access LNG at an affordable price while ensuring sustainability, and the U.S. will increase its footprint in one of the rapidly growing LNG markets.
