Govt considers cutting tax on LNG imports from the US: Report
In a move aimed at boosting purchases and reducing the trade surplus, the Indian government is reportedly considering scrapping the import tax on liquefied natural gas (LNG) from the United States. According to a recent Reuters report, the Centre is weighing the option of eliminating the customs duty and social welfare tax on LNG imports from the US.
India currently imposes a 2.5% basic customs duty and an additional 0.25% social welfare tax on LNG imports from the US. The move is expected to make US LNG more competitive in the Indian market, which is crucial for the country’s energy security.
The news comes as Indian Oil (IOCL) and other companies are in talks with US firms to source more LNG. The Indian government’s decision to consider cutting the import tax on US LNG is seen as a significant development in the ongoing efforts to reduce the country’s trade surplus with the US.
The Indian energy sector has been facing a shortage of domestic natural gas, which has led to a dependence on imports. The country’s Energy Transition Plan aims to reduce the share of fossil fuels in the energy mix and increase the use of cleaner fuels like natural gas.
LNG imports have been growing rapidly in India, driven by the increasing demand for natural gas in the power and industrial sectors. The country’s LNG imports have jumped from 1.8 million tonnes in 2015-16 to 32.5 million tonnes in 2020-21.
The reduction or elimination of the import tax on US LNG is expected to benefit companies like IOCL, which has been looking to increase its LNG imports from the US. In January, IOCL signed a deal with US-based Cheniere Energy to purchase 1.2 million tonnes of LNG per year for the next 10 years.
The Indian government’s decision to consider cutting the import tax on US LNG is also seen as a strategic move to boost bilateral trade with the US. The two countries have been engaged in negotiations to resolve trade disputes and boost bilateral trade.
In recent years, India has been increasing its LNG imports from the US, which has helped to reduce its dependence on Middle Eastern suppliers. The country’s LNG imports from the US have increased from 0.5 million tonnes in 2014-15 to 12.5 million tonnes in 2020-21.
The Indian government’s decision to consider cutting the import tax on US LNG is expected to have a positive impact on the country’s energy security and trade relations with the US. The move is also expected to benefit companies like IOCL, which has been looking to increase its LNG imports from the US.
In conclusion, the Indian government’s consideration of cutting the import tax on US LNG is a significant development in the country’s energy sector. The move is expected to boost LNG imports from the US, reduce the country’s trade surplus, and increase energy security.
