Indian Prime Minister Narendra Modi entered a "mega partnership" with the US on February 13, as both countries announced a deal for India to import more US oil and gas in an effort to reduce the trade deficit between them.
Modi's two-day visit comes amid Trump's recent orders regarding facing sweeping reciprocal tariffs imposed by US' trading partners, including India, reported BBC.
Strengthening Economic Ties
The two countries also emphasised the value of strategic petroleum reserves to maintain economic stability during crises and committed to work with key partners to expand strategic oil reserve arrangements, according to a statement from the Prime Minister Office (PMO). Trump also reiterated string US support for India’s bid to join the International Energy Agency as a full member.
According to the statement, “The leaders reaffirmed their commitment to increase energy trade, as part of efforts to ensure energy security and to establish the United States as a leading supplier of crude oil and petroleum products and liquified natural gas to India, in line with the growing needs and priorities of our dynamic economies.”
They also underscored the scope and opportunity to increase trade in the hydrocarbon sector including natural gas, ethane and petroleum products as part of efforts to ensure supply diversification and energy security.
"We have, I think, some very big things to talk about. Number one is, they are going to be purchasing a lot of our oil and gas. We have more oil and gas than any other country in the world. They need it, and we have it,” the US President said in his opening address at the joint press conference with Indian Prime Minister Modi.
As India is already heavily reliant on imported oil sourced from multiple countries, the energy deal with the US "presents a relatively low hanging fruit for both parties”, according to Radhika Rao, a senior economist at Singapore's DBS bank told the BBC. “This underscores the administration's intentions to smoothen trade relations and offer concessions to narrow the bilateral trade deficit that the US runs with India,” she told the BBC.
The development follows US’ exit from Paris Climate Agreement as Trump targets renewable energy. He has pledged to halt federal support for clean power as part of his pro-fossil fuel agenda.
When Trump first took office, India accounted for just 2.7% of US crude oil trade, receiving 140,000 barrels of the 5.2 million exported daily by the US. By 2020, India’s share had increased to 5.5% or 471,000 of 8.5 million barrels, according to Moneycontrol.
