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Virendra Pandit

New Delhi: As India and the US inch closer to finalizing a wide-ranging Bilateral Trade Agreement (BTA), New Delhi has signed a major one-year deal with Washington to import 2.2 metric tonnes (MT) of LPG from America in 2026, the media reported on Monday.

This is among the first in a series of deals that New Delhi aims to sign to increase its purchases of energy products from Washington.

Announcing this, Union Petroleum and Gas Minister Hardeep Singh Puri said that this deal opens up one of the largest and the world’s fastest-growing LPG markets to the US.

Accordingly, India’s government-controlled oil marketing companies (OMCs) will import around 2.2 MT of LPG—or nearly one-tenth of the country’s consumption—from the US in the 2026 calendar year.

India’s annual energy product purchases from Washington are worth around USD 12-13 billion, which New Delhi wants to double.

“In our endeavor to provide secure affordable supplies of LPG to the people of India, we have been diversifying our LPG sourcing. Indian PSU oil companies have successfully concluded a one-year deal for imports of around 2.2 MTPA LPG, close to 10 percent of our annual imports — for the contract year 2026, to be sourced from the US Gulf Coast — the first structured contract of US LPG for the Indian market,” he wrote on X.

This purchase is based on using Mount Belvieu as the benchmark for LPG purchases. In recent months, officials from Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) visited the US to engage with major US producers for discussions, which have been concluded now, he added.

“Even as global prices soared by over 60 percent last year, PM Modiji ensured that our Ujjwala consumers continued to receive LPG cylinders at just Rs. 500-550 whereas the actual cost of the cylinder was over Rs.1,100. On subsidies, the government footed the bill of over Rs. 40,000 crore in 2024 to ensure our mothers and sisters did not feel the burden of rising international LPG prices,” Puri emphasized.

The development also comes close on the heels of a competition between Saudi Arabia — India’s main LPG supplier — and the US to sell their LPG cargoes in Asia.

The Saudi firm Aramco even slashed the benchmark Saudi CP price for propane and butane significantly in recent months, which traders attribute to rising competition from the US, subdued crude oil prices, and lower consumption.

The Saudi Contract Price (Saudi CP) — an international LPG benchmark — has sharply corrected recently because of geopolitical and trade tensions, rising global production, weak demand, and seasonal slowdown after winter. It dropped to USD 506 per MT in August 2025 from over USD 600 per MT in March 2025. It has declined further in October and November.

These prices are expected to soften further as the ongoing tariff war is raising fears of a decline in global demand.

Saudi Arabia accounts for around one-third of India’s cumulative LPG imports, which stood at around 20.67 MT in FY25 and at 10.84 MT in H1 FY26.

India has more than 33.07 crore active domestic consumers of LPG with 10.33 crore getting subsidized cylinders under the Pradhan Mantri Ujjwala Yojana (PMUY).