The 67 Per Cent Moment: India Is Paying More for a New Economic Order
When US Secretary of State Marco Rubio visited Reliance's Jamnagar complex this week, the most revealing number was not the familiar language of a "historic partnership." It was the figure placed before the public by US Ambassador Sergio Gor: India's imports of American LPG had surged from under 10 per cent to 67 per cent of total imports in a single year, making the United States India's largest cooking-gas supplier.
That number is not merely an energy statistic. It captures the emerging structure of India's economic relationship with the United States: costlier energy, greater supplier concentration, pressure on domestic industry, weaker export competitiveness and a growing bill for the common citizen.
LPG: a costlier cylinder
India's earlier plan was to source about 10 per cent of its LPG imports from the United States in 2026, through a contract of roughly 2.2 million tonnes. The actual outcome has been far larger: US LPG now accounts for 67 per cent of imports.
US cargoes are priced off Mont Belvieu and travel far longer distances than Gulf shipments, increasing freight, insurance, canal-transit and working-capital costs. India has reduced exposure to the Gulf but replaced it with dependence on a single distant supplier whose export capacity, pricing and trade policy are shaped by American domestic politics and geopolitical priorities.
For households, the burden is partly hidden. The market-determined cost of a 14.2 kg domestic cylinder has been reported well above its retail price, with oil marketing companies absorbing under-recoveries and the government providing targeted support. The cost does not disappear; it moves from the consumer's cylinder bill to the public exchequer and the balance sheets of state energy firms.
Crude: costlier barrels, costlier diesel
India's Venezuelan crude purchases rose from $255 million in FY2025-26 to about $3.59 billion during April–August 2026. Venezuela supplied roughly 250,000 barrels per day in August and 257,000 barrels per day in September.
Venezuelan Merey crude carries a headline discount, but it is extra-heavy oil. It requires dilution, specialised handling and more complex refining, while long-distance freight can erase much of the apparent price advantage; one assessment put freight to India's west coast at about $35 per barrel against a discount of around $25 per barrel to Brent.
The deeper issue is displacement. Russia supplied 30.3 per cent of India's crude imports in FY2026, worth $40.8 billion of a $134.7 billion import bill. As Russian purchases decline under American pressure, India's crude basket becomes more expensive. Analysts estimate the cost increase at $2–3 per barrel in some scenarios, and as much as $15 per barrel if Russian oil is replaced by a mix of Venezuelan, US and Middle Eastern grades.
Since India imports nearly 90 per cent of its crude, this is not a refiner's problem alone. It enters diesel, petrol, aviation fuel, fertiliser, freight, food prices and the current account.
Coal: higher cost per unit of energy
India has reduced the volume of coal imported for power generation: power-sector imports fell from 62.5 million tonnes in FY2024-25 to 45.4 million tonnes in FY2025-26, a decline of 27.4 per cent. Imported coal used for blending has also fallen sharply.
But lower volume does not mean lower cost. The coal India continues to import particularly high-calorific-value thermal coal and coking coal remains more expensive than domestic coal once freight, port handling, insurance and quality-adjusted energy content are included. The relevant measure is the landed cost per unit of usable energy, not the tonnage imported.
The exposure is especially serious in steel. India has signalled intent to purchase US coking coal as part of a broader five-year procurement expectation of up to $500 billion covering energy, aircraft, technology and other goods. Any shift towards costlier US coking coal would raise steel costs and pass through construction, capital goods, automobiles and infrastructure.
Ethanol and sugar: food prices pay for fuel
India's ethanol programme has created a costly competition between fuel and food. Sugarcane-based feedstocks have been diverted towards ethanol production, reducing the flexibility of the sugar supply chain and tightening availability at a time when output and stocks have weakened.
The consequences are visible in prices. Retail sugar rose from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20, while S&P Global recorded a nearly 33 per cent increase by August 25. Sugar-equivalent output diverted to ethanol rose from about 0.8 million tonnes in 2019-20 to more than 3 million tonnes in 2025-26, deepening the tension between fuel blending and food availability.
The government has now excluded sugarcane juice, sugar syrup and B-heavy molasses from the 2026-27 ethanol tender, effectively setting sugar diversion for fuel blending at zero and relying instead on maize, broken rice and surplus FCI rice. That is an implicit admission that the food-fuel trade-off had become too costly.
India also continues to import costly US ethanol for industrial and non-fuel uses. The broader point is unavoidable: ethanol policy has transferred value from sugar consumers, food processors and households towards distillers, fuel blenders and feedstock suppliers, while increasing exposure to imported ethanol for certain industrial requirements.
Tariffs: 18 per cent is a new burden, not relief
The February 2026 India-US framework reduced the US reciprocal tariff on many Indian goods from the punitive 50 per cent peak to 18 per cent. But this must not be described as a gain in absolute terms.
Before 2025, most Indian exports to the United States faced tariffs of roughly zero to 3 per cent. An 18 per cent duty therefore represents a six- to eighteen-fold increase for many products, even after the partial rollback from 50 per cent. The relevant comparison for Indian exporters is not 50 per cent versus 18 per cent; it is 0-3 per cent versus 18 per cent.
The damage is concentrated in labour-intensive sectors. Textiles, garments, leather, seafood, gems and jewellery face thinner margins, cancelled orders and competition from Bangladesh and Vietnam. Before the partial settlement, analysts warned that 50 per cent duties could shave 70–100 basis points from GDP growth and put up to five million jobs at risk in export-facing sectors. The 18 per cent settlement reduces the shock but does not restore the oldcompetitive position.
Agriculture: cheaper imports, weaker Indian producers
The interim framework reduces or eliminates duties on a wide range of US agricultural and food products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
The exposure is sector-specific:
- Apples: quota-based access increases pressure on growers in Kashmir and Himachal Pradesh, even where minimum import prices and safeguards remain.
- Almonds, walnuts and pistachios: lower duties intensify competition for domestic dry-fruit producers and processors.
- Soybean oil: greater imports may restrain edible-oil prices but weaken the incentive to expand domestic oilseed cultivation.
- DDGS and sorghum feed: cheaper US feed imports can help livestock producers in the short run but displace domestic maize, sorghum and feed-grain value chains.
The government says sensitive products such as dairy, cereals, millets, meat and honey remain protected, and that quotas are within existing import levels. But tariff schedules alone do not protect farmers. Quota administration, quality standards, logistics, currency movements and private-sector buying behaviour will decide whether the protection is real.
Medical devices and ICT: higher import dependence
India has agreed to address US concerns on medical-device market access. Easier access for imported equipment can weaken the domestic case for moving beyond low-end consumables into imaging systems, implants, diagnostics and precision equipment.
The same pressure runs through information technology. India has committed to eliminating restrictive import-licensing procedures affecting US ICT goods and to expanding trade in technology products, including GPUs and data-centre equipment. This deepens reliance on US-origin chips, servers, networking equipment and cloud platforms.
The strategic risk is that India becomes a large consumer market for American digital infrastructure without securing equivalent capabilities in design, fabrication, packaging, standards and data governance.
Aircraft, defence and the $500 billion question
India's stated intention to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over five years is the widest expression of the new bargain.
Aircraft and defence purchases create long-term dependence on American maintenance, spare parts, software upgrades, export approvals and lifecycle support. The question is not whether India should buy; it is whether each purchase builds Indian capability or merely deepens dependence.
Without co-production, technology transfer, local maintenance facilities, indigenous spares and export opportunities for Indian suppliers, high-value procurement becomes a recurring source of strategic leverage for the supplier.
Digital trade: the quiet frontier
The framework also commits India and the United States to address "discriminatory or burdensome practices" in digital trade and to develop ambitious digital-trade rules. India has not committed to removing its digital services tax, but the direction of negotiation is clear.
The danger is that digital rules framed around US commercial interests could constrain India's ability to regulate data flows, require local storage, tax platforms, protect domestic start-ups or govern large technology firms. India needs imported GPUs and data-centre equipment, but it should not trade away regulatory autonomy to obtain them.
The cumulative pressure
The sectors differ, but the mechanism is the same: India accepts higher-cost imports, greater supplier concentration, or reduced policy space, and the burden is passed to households, firms and the exchequer.
The test India must apply
India should not oppose cooperation with the United States. But it must insist that every commitment pass four tests.
- First, the landed-cost test: does the import reduce the full delivered cost after freight, duties, financing and lifecycle expenses?
- Second, the resilience test: does it diversify supply, or merely replace one dependency with another?
By these tests, the emerging pattern is clear. India is being pushed towards a higher-cost, higher-dependence economic architecture: costlier LPG, costlier crude, costlier coal, costlier ethanol-linked food pressures, greater import competition in agriculture, deeper reliance on US technology and equipment, and an 18 per cent tariff wall that remains far above the pre-2025 baseline of roughly zero to 3 per cent.
The common citizen will not follow the details of Mont Belvieu pricing, Venezuelan crude grades or GPU export controls. They will experience the bargain through a cooking-gas cylinder, a litre of diesel, a kilogram of sugar, an electricity bill, a lost textile order or a weaker bargaining position for Indian farmers. India's economic diplomacy must therefore be judged not by the scale of its purchases from Washington, but by whether it protects household budgets, industrial competitiveness and strategic autonomy.
[Major General Dr. Dilawar Singh, IAV, is a distinguished strategist having held senior positions in technology, defence, and corporate governance. He serves on global boards and advises on leadership, emerging technologies, and strategic affairs, with a focus on aligning India's interests in the evolving global technological order.]