India’s Rising Dependence on U.S. LPG Imports — UPSC Mains Notes (GS Paper III)

UPSC Mains GS Paper III Energy Security

India’s Rising Dependence on U.S. LPG Imports

The US has become India’s largest single LPG supplier, with its share of India’s LPG imports rising from 5% before 2020 to 30% now.
US SHARE IN LPG IMPORTS
5% (pre-2020) → 30% now
ANNUAL LPG IMPORTS
~14–15 million tonnes
LPG DEMAND GROWTH
6–7% annually (5 yrs)
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India’s LPG Import Shift: Context and Background

  • The US has become India’s largest single LPG supplier recently.
  • US share in India’s LPG imports rose from 5% before 2020 to 30% now.
  • The shift was accelerated by Strait of Hormuz disruptions during the Iran conflict.
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India’s LPG Dependence Statistics

  • India is the world’s second largest LPG consumer after China.
  • India imports approximately 14-15 million tonnes of LPG annually.
  • LPG demand is growing at 6-7% annually over the past five years.
  • Over 10 crore households benefit from subsidised LPG under PM Ujjwala Yojana.
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Challenges of Overdependence on US LPG

  • Long Voyage Costs: US LPG travels 14,000 nautical miles versus Middle East’s 3,000 miles.
  • Price Volatility: US prices linked to Henry Hub benchmark which is highly volatile.
  • Subsidy Pressure: Higher US LPG prices combined with rupee depreciation strain subsidy budgets.
  • Fleet Deficit: India’s limited Indian-flagged LPG carrier fleet increases foreign shipping dependence.
  • Strategic Leverage Risk: The US can potentially use LPG supply as diplomatic leverage in bilateral negotiations.
India’s US LPG shift reflects supply chain pragmatism but creates new strategic vulnerabilities — true energy security requires diversified suppliers, strategic reserves and domestic production.
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Way Forward

Supplier Diversification
Restore balance by increasing imports from Saudi Arabia, Qatar and UAE.
Strategic Reserves
Create strategic LPG reserves similar to the existing Strategic Petroleum Reserve.
Fleet Expansion
Incentivise Indian shipping companies to acquire LPG tankers under Indian flag.
Domestic Production
Accelerate upstream exploration to increase domestic LPG from associated gas.
CBG Expansion
Accelerate Compressed Biogas expansion as a strategic alternative to LPG.
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Source: The Hindu

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