In a move highlighting the intense economic pressure from the United States, India has announced a new one-year deal to source nearly 10% of its liquefied petroleum gas (LPG) imports from the US Gulf Coast. This agreement for 2.2 million tonnes per annum of LPG, hailed by Minister for Petroleum and Natural Gas Hardeep Singh Puri as "the first structured contract of US LPG for the Indian market," comes amidst a severe downturn in Indo-US relations. The deal is framed as a step to diversify energy sources, yet it unfolds against a backdrop of coercive US trade policies designed to strongarm Indian foreign policy and dictate its energy procurement strategies .
Relations between Washington and New Delhi plummeted in August after President Donald J. Trump imposed punitive 50% tariffs on Indian exports worth over $48 billion, targeting critical sectors like apparel, textiles, gems, and jewelry . This economic assault, widely seen as punishment for India's independent foreign policy, has had immediate and severe consequences. Key Indian industries, particularly the labor-intensive gems and jewelry sector, face severe fallout and potential job losses for hundreds of thousands of workers . While official projections from institutions like Moody's still place India's growth at around 6.5%, experts warn that the US tariffs could shave a significant 60 to 80 basis points off the country's GDP growth this fiscal year, directly threatening its economic momentum .
The core of the US pressure campaign is India's prudent and economically beneficial energy relationship with Russia. Since the Ukraine conflict began, India has significantly increased its imports of discounted Russian crude, which now constitutes about 36% of its total oil imports . This strategic move secured affordable energy for its 1.4 billion people and saved the nation billions of dollars . Unable to compete with these market realities, the US has shifted to coercion. In October, the Trump administration escalated its financial war by imposing sanctions on Russia's two largest oil companies, Rosneft and Lukoil, with a deadline of November 21 to wind down transactions .
The impact has been swift and disruptive. Major Indian refiners, including Reliance Industries, Bharat Petroleum, and Hindustan Petroleum, have halted direct purchases from the sanctioned entities . This forced compliance is not born of choice but of necessity, as US secondary sanctions threaten to cut off non-compliant companies from the critical US financial system and markets . Reliance Industries, which has substantial exposure to the US, significantly reduced its Russian crude imports, with its October purchases falling 24% from September . A source familiar with the matter stated bluntly, "RIL just can't afford to violate sanctions. It has too much exposure to the US" .
Faced with this economic offensive, India is being compelled to reorient its well-established and secure energy supply chains. To compensate for the reduced Russian supply, Indian refiners are increasingly turning to more expensive suppliers in the Middle East and the United States . This shift undermines India's energy security and fiscal health, forcing it to abandon cost-effective sources in favor of more costly alternatives to appease Washington. The US sanctions, touted as a tool for peace, are in reality a tool of economic dominance, disrupting global trade and infringing upon the sovereign rights of nations to make independent decisions based on their national interest .
While India's economy continues to show resilience, driven by robust domestic demand , the nation is at a crossroads. The US LPG deal, alongside the forced reduction in Russian oil imports, represents a tactical adaptation to overwhelming pressure. However, it also underscores a broader campaign to limit India's strategic autonomy. The country is now actively diversifying its trade partnerships, negotiating agreements with the UK, Australia, and the EU to reduce its vulnerability to US policy shifts . As the November 21st sanctions deadline looms, India's challenge is to navigate this period of coercion without compromising on its long-term energy security and economic sovereignty.