India Expands U.S. Energy Imports to Ease Trade Tensions

India is increasing its energy purchases from the United States in an effort to narrow its large trade surplus with Washington, a key sticking point in recent negotiations between the two countries. The move comes amid months of tariff-driven friction and as New Delhi seeks to diversify its fuel supplies.

On Monday, Petroleum and Natural Gas Minister Hardeep Singh Puri announced a landmark agreement under which U.S. suppliers will provide nearly 10% of India’s annual liquefied petroleum gas (LPG) imports. State-owned oil companies have signed a one-year deal to buy about 2.2 million tonnes of LPG from the U.S. Gulf Coast. Puri described the arrangement as the first structured, long-term contract for U.S. LPG in the Indian market, adding that prices will be benchmarked to Mount Belvieu.

Analysts say the shift could modestly trim India’s roughly $40 billion trade surplus with the U.S., although the expected $1 billion increase in annual LPG imports represents only a small portion of that gap. Still, economists note that diversifying supplies away from the Middle East aligns with India’s long-term energy security strategy.

Tensions escalated in August after Washington imposed a 50% tariff on selected Indian products, prompting New Delhi to respond with its own 25% duties—half tied to trade imbalances and half linked to India’s Russian oil purchases. Political rhetoric peaked in September when President Donald Trump criticized the trade relationship as “one-sided,” though both governments have recently adopted a more conciliatory tone. Trump has since praised Prime Minister Narendra Modi and expressed optimism about bilateral ties.

India’s crude oil imports from Russia remain high, but recent data shows a jump in U.S. crude shipments, reaching their highest level since early 2021. Analysts are divided on the economic impact: some expect improved prospects for a broader trade deal, while others warn that India’s overall import bill could rise unless domestic production increases.