Cooking Gas Import from US: What It Means for Tax, Trade & Consumers
India is planning to import nearly 10% of its cooking gas from the US by 2026, as per recent government sources. This marks a major shift in sourcing strategy—and it’s not just about energy security. It has direct tax, trade, and GST implications, especially for policymakers, oil companies, and even domestic consumers.
Let’s decode what this move could mean for India’s economy and your kitchen budget.
Why is India importing LPG from the US?
India is the second-largest LPG consumer in the world. With rising demand and domestic production unable to meet it fully, India has traditionally relied on imports from the Middle East (like Qatar, UAE, and Saudi Arabia).
However, the US has emerged as a major exporter of LPG (liquefied petroleum gas), thanks to its shale boom.
Key reasons for the US shift:
- Diversification of supply to avoid geopolitical risks
- Favourable long-term pricing and stable contracts
- Lower freight rates via longer contracts
- Strengthening India–US trade relations
GST on LPG in India: Quick Summary
Here’s how LPG is taxed under GST, depending on usage:
| Consumer Type | GST Rate | Notes |
|---|---|---|
| Domestic (household use) | 5% | Supplied by government-authorised distributors |
| Commercial/Industrial use | 18% | Includes hotels, restaurants, factories |
- LPG subsidy (if any) is directly transferred under DBT
- Imports are subject to IGST at 5% or 18%, depending on intended usage
✅ Reference: Notification No. 1/2017-Integrated Tax (Rate)
Import Duties on Cooking Gas
Currently, LPG imports attract minimal customs duty to support affordability:
- Basic Customs Duty (BCD): Nil
- IGST: 5% or 18%, based on user type
- Social Welfare Surcharge (SWS): 10% of BCD (but since BCD is nil, this is also nil)
Source: CBIC Customs Tariff Schedule (2025–26)
👉 Importing from the US under long-term contracts may reduce price volatility, helping government manage subsidy costs better.
Economic & Tax Impacts of US LPG Imports
1. Boost to India–US trade ties
A long-term LPG import deal helps rebalance trade. India currently runs a large goods trade deficit with the US, and energy imports can offset that.
2. Domestic pricing strategy
Landing cost affects retail prices. If US imports reduce average procurement cost, it can support stable LPG prices in India despite global fluctuations.
3. GST revenue potential
- More commercial LPG demand → Higher 18% GST collections
- If usage increases in manufacturing, input tax credit (ITC) becomes relevant
4. Forex and logistics advantage
Pre-agreed shipping routes and long-term deals can stabilise forex outflows. Also enables port infrastructure upgrades for US-origin gas.
Expert View: What Industry Analysts Say
According to a senior executive at Indian Oil Corp (reported by Economic Times), “Long-term US supply contracts offer stability in pricing and diversification. This will also help mitigate regional supply disruptions from West Asia.”
Practical Tip for Businesses:
If you’re in bulk catering, manufacturing, or hospitality, switching to piped LPG or bulk commercial cylinders has GST ITC benefits—but only if your invoices are from GST-registered dealers.
FAQs on LPG Imports and GST
Q1. Will this reduce domestic LPG prices?
Possibly. If the landed cost is lower and subsidy burden eases, the government may avoid price hikes.
Q2. Is GST applicable on all LPG imports?
Yes, but the rate (5% or 18%) depends on end-use—domestic vs. commercial/industrial.
Q3. Can commercial users claim ITC on LPG purchases?
Yes, but only if used for business purposes and proper GST invoice is available.
Final Thoughts
The move to import 10% of cooking gas from the US is not just a geopolitical story—it carries real tax and trade consequences for India. From GST collections to customs policies and consumer pricing, the impact will unfold across multiple layers.
Stay compliant and tax-efficient. For expert GST and import advisory, talk to Efiletax today.
Summary
India plans to import 10% of its LPG from the US by 2026. This shift affects GST rates, customs duty, and consumer prices. Here’s how it impacts trade, tax, and kitchen budgets.