India is reportedly considering eliminating import taxes on US ethane and liquefied petroleum gas (LPG) as part of broader trade negotiations with the US.
This move aims to reduce India’s trade surplus and ease tariff burdens, reported Reuters, citing sources.
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The proposal aligns with India’s interest in removing import taxes on US liquefied natural gas (LNG) and increasing its purchases from the US.
Currently, India imposes a 2.5% import tax on ethane, primarily used for petrochemical production, and on propane and butane, which are used in LPG for cooking fuel.
In the 2023–24 fiscal year, India imported 18.5 million tonnes (mt) of LPG, valued at $10.4bn (Rs888.8bn), mainly from the Middle East.
India is the second-largest buyer of US ethane after China, importing 65,000 barrels per day (bpd) last year.
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Reliance Industries, which operates the world’s largest petrochemicals complex, is India’s primary ethane buyer.
In February, New Delhi and Washington agreed to work on the first phase of a trade deal, aiming to grow bilateral trade to $500bn by 2030 and reduce India’s $45.7bn trade surplus.
A final decision on duty cuts will be made by India’s Commerce and Finance Ministry officials, who have not commented on the matter.
India’s steam cracker capacity allows for 9.5mt of ethylene production, accommodating up to 2mt (92,000bpd) of ethane as feedstock.
Prashant Vashisth, vice-president at Moody’s affiliate ICRA, noted that importing more LPG is logistically easier as India imports around 60% of its LPG needs.
Additionally, India has accelerated its exploration and production efforts, awarding 28 blocks under the Open Acreage Licensing Policy Bid Round-IX.
This expansion covers 136,596km² across eight sedimentary basins, with 38% located in formerly restricted “No-Go” zones.
Two other blocks were also awarded under the Special Discovered Small Field Round, receiving 60 bids.
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