Workers walked on the dock platform at Dhamra LNG Terminal Private Limited (DLTPL) in Dhamra port in Badrak district, Odisha state, India on October 16, 2024. (Punit Paranjpe/AFP photography) paranjpe/afp by Getty image)
punit paranjpe | AFP | Getty Images
The report comes from this week’s CNBC’s “Inside India” newsletter, which brings you timely, insightful news and market commentary about emerging powers. Like what you saw? You can subscribe here.
Big story
Can the answer to end trade tensions between India and the United States be in Houston and Hyderabad?
The unexpected solution is to emerge from the booming gas industry in the United States, just as the world’s most populous country is placing a big bet on gasoline imports to drive its growing economy.
India will double its liquefied natural gas (LNG) imports by 2030, which will please Washington while helping New Delhi reduce its dependence on coal and oil. Part of the surge in demand is due to the government’s intention to increase the share of natural gas in its energy portfolio to 15% from 6.7% at the end of 2023.
“As one of the fastest-growing energy markets, India has nearly doubled its LNG imports worldwide in this decade’s estimates,” said Mayank Maheshwari, equity analyst at Morgan Stanley. .” “U.S. liquefied natural gas imports are crucial to the government’s push for a gas-based economy.”
The timing couldn’t be better. Earlier this month, U.S. President Donald Trump announced a “reciprocal tariff” plan for countries that impose duties on U.S. import obligations. India’s tariff rates are high and its trade deficit with the U.S. goods is significantly insufficient, and may be particularly vulnerable to such measures.
Energy trade is becoming a potential bridge between the two countries. At a recent meeting in Washington, Trump and Indian Prime Minister Narendra Modi agreed to work to make the United States “a supplier of oil and gas to India.”
“Hopefully, their number one supplier,” Trump added.
The economy of fuel consumption
India’s appetite for natural gas is growing rapidly. The government has actively promoted Vehicle powered by compressed natural gasresulting in a 33% increase in sales in 2024 to reach 500,000 vehicles Maruti Suzuki Takes the market share of the lion. In the past seven years ending November 2023, the number of households with pipeline gas connections has increased by 250% to 11.9 million.
In 2024, India also announced plans to convert one-third of its heavy trucks from diesel to liquefied natural gas in the next five to seven years. Natural gas also plays a crucial role in fertilizer production, thus promoting food security in India.
However, domestic production is unlikely to be in sync with demand.
“Recent demand has seen a 51% increase in domestic gas production (between 2020 and 2025), but that is not enough to meet the country’s growing demand for natural gas,” said Rystad Energy analysts led by Kaushal Ramesh. Last year, he said. Report. “The result is that India will continue to rely heavily on imports to meet its future energy needs.”
US Solutions
This is where U.S. natural gas exports can play a key role. Morgan Stanley’s Mahesheshwari, “The interesting part about US LNG export exports is that they are affordable for Indian consumers at a price sensitive price of Indian consumers (UK UK heat units of $9 to $10, or more than spot LNG prices About 30% cheaper),” explained Maheshwari of Morgan Stanley.
“Historically, natural gas companies in India have guided the use of oil and gas connection contracts as the best long-term gas procurement strategy,” the analyst added. “We believe that if a LNG contract is signed, it will be in this direction,” he added. A step forward.”
Santanu Sengupta, chief Indian economist at Goldman Sachs, pointed out that buying energy has become a key component of growing U.S.-India relations. These countries are working to reach a trade agreement that aims to significantly increase bilateral trade to $500 billion by 2030.
Recent developments, such as state-owned companies seeking long-term natural gas supply contracts, suggest momentum is being established and India takes increased natural gas imports seriously.
The government-owned Gujarat State Petroleum recently signed a 10-year deal with the French president of gas supply, while the Indian Oil Company has reached a 14-year deal with Abu Dhabi’s ADNOC.
tHis path to balanced trade is unlikely to be direct. China’s recent decision to impose more tariffs on U.S. energy exports, including a 15% tax on liquefied natural gas, could have unexpected consequences. Maggie Xueting Lin, a global commodity analyst at Citigroup, proposed that this could allow more US gas in India to benefit Indian buyers.
Balanced behavior
The broader trade relations remain complex. According to Goldman Sachs, India’s bilateral commodity trade surplus has doubled to $35 billion over the past decade. The U.S. trade-weighted average tariff rate is 2.9%, compared with 9.4% in India.
But both sides seem willing to find common ground. India has Reduced tariffs on several US products And increased the market acquisition of its agricultural products.
The question is whether the recent energy partnership can help bridge the wider trade gap, which is the source of friction between Washington and New Delhi.
Need to know
India and the United States are aiming to double transactions by 2030 to $500 billion. According to Indian Prime Minister Narendra Modi Announced at a joint press conference With U.S. President Donald Trump on February 13. Simple average in India Tariffs on countries with the most popular national identity, such as 17% in the United States, Compared with the United States, which collects 3.3%.
India’s economic outlook is positive. India’s economic growth could accelerate According to the February announcement by the Reserve Bank of India, it will be between 2024 and the second half of 2025. The RBI said increasing rural demand for a strong agricultural sector and restoring urban consumption at lower interest rates and taxes will drive economic expansion.
India’s core ambitions. NTPC is the Indian National Electric Power Company and is planning Build a nuclear power plant According to Reuters, its total capacity is 30 GW, which quotes three sources that directly understand the matter. Sources said the utilit company initially planned to build 10 GW of nuclear power, but raised its goals after the Indian government announced plans to open the industry.
Tesla has increased its presence in India. Elon Musk’s electric car company chooses Indian city New Delhi and Mumbai as new websites for two Tesla showroomsReuters reported that sources familiar with the matter were cited. According to the first source, the locations will be showrooms, not service centers, and Tesla plans to “sell imported electric vehicles in India”. Indian Prime Minister Narendra Modi meets Tesla CEO Elon Musk February 13 in the United States.
What happened in the market?
Indian stocks continued to decline after a brief positive meeting earlier this week. this Nifty 50 The index fell 0.07% this week and has lost 3.1% of its value so far this year. The benchmark is 12.6% lower than its latest height in September 2024.
India’s 10-year government bond yields rose to 6.66%, 3 basis points lower than last week.
On CNBC TV this week, Raghuram Rajan, professor of finance at the University of Chicago Business School and governor of the Reserve Bank of India, said the relationship between the United States and India could be a Key Relationships in the 21st Century“.” The state shared the defense and trade relations and its existence in the United States are based on the basis of this relationship. Rajan also noted that India is the world’s largest importer of defense goods, which could mean “more cooperative with others” with the United States “as the country moves away from Russia.
At the same time, there will be aNew supply wall“From 2027, Nikhil Bhandari of the Asia-Pacific Natural Resources and Clean Energy Research from Goldman Sachs, the United States, Qatar and Australia, said if Russia and Ukraine are in progress A peaceful deal and normalize the flow of natural gas. Prices may drop to heat units per million UK (MMBTU) throughout Europe. In 2026.
What happened next week?
Next week, there will be a series of data releases in various countries in manufacturing and service sectors and IPOs for power plant equipment suppliers in India.
February 21: High-quality power equipment IPO,,,,, Indian HSBC Flash PMI FebruaryEurozone HCOB FLASH PMI February, UK Standard & P Flash PMI February, Japan Jibun Bank Flash PMI February, Japan inflation rate January
February 24: Eurozone inflation rate in January, final
February 27: U.S. GDP in the fourth quarter, second estimate
