India plans to put an end to taxes on American ethane and liquefied oil gas (LPG) imports under wider negotiations with Washington, since it seeks to reduce its commercial surplus and relieve its tariff squirrel, three family sources said with the matter.
The proposal to get rid of tariffs for products used to cook gas and petrochemical production occurs when India Mulls discard the import tax for liquefied natural gas (LNG) of the USA and increase the purchases of the United States fuel.
As the radical tariffs of President Donald Trump shake the economies and markets, several Asian countries that direct commercial surpluses with Washington seek to import more energy in the hope of avoiding heavier tariffs.
India imposes import taxes of 2.5 percent in ethane, mainly used as raw material to produce petrochemicals, and propane and butane, which are used for LPG mainly used as cooking fuel.
In fiscal year 2023-24, India imported 18.5 million metric tons or LPG worth $ 10.4 billion, cordination to the data of the Indian government, mainly from the Middle East.
It is buyer number 2 of the American ethane after China, according to the US Energy Information Administration, importing 65,000 barrels per day last year, compared to 2,27,000 BPD for China. However, the American-China commercial war has sent tariffs to emerge and it is likely to reduce China imports.
Reliance Industries, which operates the world’s largest petrochemical complex, is the main buyer of Ethane in India.
New Delhi and Washington agreed in February to work in the first phase of a commercial agreement that will be completed at the end of this year, in order to increase bilateral trade to $ 500 billion by 2030 and reduce the commercial surplus of $ 45.7 billion of India.
The sources of the Indian government said that officials of the Ministry of Commerce and Finance will make a final decision on service cuts. The three spoke on condition of anonymity due to the sensitivity of the conversations.
The Ministry of Finance and Commerce of India did not respond to the emails of Reuters in search of comments.
Analysts say that there is a limited range for India to increase the imports of American ethane in the short term due to the lack of ships, storage tanks and cookies that process liquid gas.
“It will be a challenge for the United States to increase ethane exports to India, since India seems to have already maximized its matter of raw materials due to favorable current margins,” said Cheryl Liu, an analyst for energy aspects.
The vapor cookie capacity of India is around 9.5 million metric tons of ethylene production, which can accommodate up to 2 million tons (92,000 BPD) or ethane as raw material, he said.
It is logistically easier to import more LPG, said Prashant Vashist, vice president of Moody’s Affiliate Icra. India imports around 60 percent or its LPG needs.
Posted on April 16, 2025