Could the answer to ending trade tensions between India and the United States lie beneath the ground in Houston and Hyderabad?
The unexpected solution is bubbling up from America’s booming natural gas industry, just as the world’s most populous country is betting big on gas imports to power its growing economy.
India is on course to double its liquified natural gas (LNG) imports by 2030, progress that would please Washington while at the same time helping New Delhi reduce its reliance on coal and oil. The surge in demand is driven partly by the government’s intention to increase the share of natural gas in its energy mix to 15% by 2030 from 6.7% at the end of 2023.
“Being one of the fastest-growing energy markets, India is nearly doubling LNG imports globally, by our estimates for this decade” said, an equity analyst at Morgan Stanley. “Imports of U.S. LNG will be critical to the government’s push for a gas-based economy.”
The timing could not be better. Earlier this month, U.S. President Donald Trump unveiled plans for “reciprocal tariffs” on countries that impose duties on American imports. India, with its higher tariff rates and a substantial trade deficit for goods with the United States, could be particularly vulnerable to such measures.
Energy trade is emerging as a potential bridge between the two nations. During their recent meeting in Washington, Trump and Indian Prime Minister Narendra Modi agreed to work toward making the United States “a leading supplier of oil and gas to India.”
India’s appetite for natural gas is growing rapidly. The government has aggressively promoted vehicles powered by compressed natural gas, leading to a 33% increase in sales in 2024 to more than half a million vehicles, with Maruti Suzuki
taking the lion’s share of the market. The number of households with piped natural gas connections has grown 250% over the past seven years ending November 2023 to 11.9 million.
In 2024, India also announced plans to convert a third of its heavy-duty trucks from diesel to liquefied natural gas over the ensuing five to seven years. Natural gas also plays a crucial role in fertilizer production, contributing to India’s food security.
However, domestic production is unlikely to keep pace with demand.
“Near-term demand is supported by a 51% jump in domestic gas production [between 2020 and 2025], but this will not be enough to meet the country’s growing demand for natural gas,” said Rystad Energy analysts led by Kaushal Ramesh in a report last year. “The result is that India will continue to rely heavily on imports to satisfy its future energy needs.”
