India's oil PSUs ink landmark US LPG deal covering 10% of 2026 imports

India has signed its first structured deal to buy 2.2 million tonnes of LPG from the US in 2026, a move the government says will boost supply security

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Monday announced that India has finalised its first structured contract to source liquefied petroleum gas (LPG) from the United States, marking what he described as “a historic first” for one of the world’s fastest-growing LPG markets.

 

In a post on X, Puri said, "A historic first! One of the largest and the world’s fastest growing LPG market opens up to the United States.  In our endeavour to provide secure affordable supplies of LPG to the people of India, we have been diversifying our LPG sourcing." 

 

  Puri said that state-run oil marketing companies, including Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, have concluded a one-year agreement to import about 2.2 million tonnes per annum (MTPA) of LPG for the contract year 2026. This volume accounts for nearly 10 per cent of India’s annual LPG imports, making it the "first structured contract of US LPG for the Indian market".

 

The minister said, "This purchase is based on using Mount Belvieu as the benchmark for LPG purchases and a team of our officials from Indian Oil Corp Ltd, Bharat Petroleum, and Hindustan Petroleum Corporation had visited the US and engaged in discussions with major US producers over the last few months, which have been concluded now."

 

Government support helped cushion price surge

 

Puri said that despite a sharp rise in global LPG prices last year, the Centre ensured support for beneficiaries of the Pradhan Mantri Ujjwala Yojana. “Even as global prices soared by over 60% last year, Modiji ensured that our Ujjwala consumers continued to receive LPG cylinder at just ₹500-550, whereas the actual cost of the cylinder was over ₹1100,” he said.

 

He added that the Union government absorbed much of the price increase, spending over ₹40,000 crore in subsidies last year to shield consumers from the impact of global price volatility.

India, US move closer to trade deal

 

This comes days after US President Donald Trump said Washington and New Delhi were “pretty close” to reaching a fair trade deal. Both sides have already completed five rounds of talks, with the latest in-person meeting held in Washington last month. 

 

Meanwhile, Commerce and Industry Minister Piyush Goyal said India is committed to securing an agreement that protects domestic interests while strengthening economic ties with the US. Speaking at the Udyog Samagam 2025 in New Delhi last week, he stressed that India’s priority is a deal that is “fair, equitable and balanced”.

 

“We are working for a good trade deal in the interest of India. At the same time, India is not going to compromise the interests of its farmers, fishermen, workers, labour, and our dairy... We are working on a fair, equitable and balanced trade deal,” he said.

 

Bilateral relations had come under strain after the US imposed a 50 per cent tariff on several Indian goods in August, including a 25 per cent punitive tariff linked to India’s purchase of Russian oil. The move led to a temporary pause in discussions.

 

Once talks resumed, India pushed strongly for tariff relief. New Delhi asked Washington not only to remove the 25 per cent punitive tariff but also to reduce reciprocal duties to at least 15 per cent, a level that would help Indian exporters remain competitive compared to Asian peers.

 

Another major agenda point in recent negotiations has been the US’s concerns about India’s continued imports of Russian oil. Officials from both countries have held detailed discussions to find a solution that addresses Washington’s worries without disrupting India’s energy security.