In India, a substantial 62% of LPG is used domestically for cooking. However, nearly 90% of LPG is imported from abroad, with a significant portion coming from Middle Eastern countries. Against this backdrop, India has made a major agreement with America for LPG imports, and approximately 2.2 million tons of LPG will be imported from America in 2026. This will account for about 10% of the country's total annual imports.
Butane-based LPG is considered more useful for cooking in India. The gas obtained from Middle Eastern countries is also of this type. American LPG is primarily propane-based, which is not considered as effective in Indian weather. Nevertheless, China has recently significantly reduced imports from the US, making American LPG cheaper in the international market. Considering this situation, India has decided to diversify its LPG import sources. There are indications that tariff-related tensions between India and the US are beginning to ease due to this agreement. Petroleum Minister Hardeep Puri also stated that this agreement is important and that the US has withdrawn some controversial tariff demands. This agreement has been signed by government-owned companies Indian Oil, Bharat Petroleum, and Hindustan Petroleum in India.
Will the price of gas cylinders decrease?
However, will the prices of gas cylinders in India immediately decrease due to this agreement? This question arises. According to experts, the likelihood is very low. This is because the government currently sets the prices of LPG cylinders, and oil companies have to bear a loss of about 220 rupees per cylinder. In 2024–25, the total loss of these companies has reached 41,270 crore rupees, and the government has to bear this burden through subsidies. In such a situation, even though cheaper LPG will be available from America, it does not seem that consumers will directly benefit from it.
Lower likelihood of gas cylinder prices decreasing
Meanwhile, India produced about 1.3 million tons of LPG in 2024, which is 42 percent of the country's total consumption. India relies on imports for the remaining 66 percent of LPG. The UAE, Qatar, Kuwait, and Saudi Arabia are the major supplier countries. The government plans to increase local LPG production by 15 percent by 2030. Now, due to this agreement with the United States, there may be some savings in import costs in the future, and it may help reduce the subsidy burden on the government. However, the likelihood of immediate or direct benefits to the average consumer is low.