India is weighing the option to scrap its import tax on American liquefied natural gas to increase U.S. LNG imports and reduce its trade surplus with the United States, sources from Indian industry and government have told Reuters.
Since taking office in January, U.S. President Donald Trump has been on the offensive to impose tariffs on countries with which the United States has large trade deficits. India is one of these.
India could make U.S. LNG more competitive in its market if it removes the import tax, a government source told Reuters.
“We are considering ending the import tax on U.S. LNG under the bilateral trade agreement, similar to our model with the UAE,” another source with knowledge of the deliberations told the news agency.
India will aim to buy more American oil and LNG to reduce the surplus and avoid potential tariffs from President Trump, the fast-growing Asian economy said last month.
India is likely to significantly increase its energy purchases from the U.S.,
India’s Foreign Secretary Vikram Misri said in February in Washington after a meeting between President Trump and Indian Prime Minister Narendra Modi.
“I think we purchased about $15 billion in US energy output,” Bloomberg quoted Misri as telling a news conference.
“There is a good chance that this figure will go up as much as $25 billion,” the Indian official added.
Ahead of the Trump-Modi meeting, Indian companies were already discussing increased purchases of oil and LNG from the U.S.
Indian Oil Corporation is in discussions to agree on a long-term supply deal with U.S. Cheniere Energy, in what could be one of many new LNG supply agreements between India and America.
GAIL India, the biggest natural gas distributor in the country, is reviving plans to procure U.S. LNG supply in the long term by either buying a stake in an American export project or signing a long-term offtake agreement, a top company official told Reuters last month.
By Tsvetana Paraskova for Oilprice.com
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