India and US talk trade amid energy-security potential of LNG

Donald Trump and Narendra Modi are pursuing trade talks. The US administration is seeking increased Indian imports of American liquefied natural gas (LNG), which would reduce the trade surplus that has vexed the Trump team.

On the Indian side, the nation's long-term energy security needs could make Modi amenable to a deal.

Historically, India has grappled with significant energy deficits: measured demand exceeds electricity supplied. The picture has shifted dramatically over the past decade: a major expansion in domestic coal infrastructure in the mid-2010s, followed by a rapid build-out of renewables, has reduced the severity of electricity shortfalls. Still, the gap between India’s energy consumption and domestic production remains wide—especially in fossil fuels—due to a growing population and surging economic activity.

While renewables now account for over a third of installed power generation capacity, their contribution to actual electricity generation remains limited—hovering around 15%. This mismatch is largely due to the inherent intermittence of sources like solar and wind.

India possesses enormous reserves of coal; as a result, this fuel source continues to dominate India’s electricity mix, accounting for approximately 70% of total generation.

Natural gas accounts for just 5% of installed capacity and produces barely 2% of total electricity. US proponents of LNG will tout this fuel as cleaner than coal and a more flexible, relatively secure option to bridge India’s energy gap.