India national Budget likely to scrap import duty on LNG
The Indian government is considering scrapping an import duty on liquefied natural gas (LNG) in the forthcoming Budget to be presented before Parliament next month.
Government officials say that the Petroleum and Natural Gas Ministry has made a strong pitch for reducing the current LNG import duty from 2.5% to nil, in line with the objective of promoting the green energy, lowering the cost of power generation, increasing fertiliser production and extending the city gas distribution network across urban geographies.
The officials say that the issue had already been discussed in the course of pre-Budget consultations with the Finance Ministry.
The national budget of 2017/18 lowered the LNG import duty from 5% to 2.5%, but considering low domestic production and rising imports, the Petroleum Ministry has argued for scrapping the levy altogether.
The government earlier exempted power producers from paying import duty, but large sectors, such as petrochemicals, fertiliser and liquefied petroleum gas, have been denied the exemption and the Ministry is now seeking a level playing field for all LNG users, the officials add.
The proposal to scrap the import duty is also a compulsion of lower domestic production, which increased by a margin 0.4% during 2017/18, while imports increased 12.6% during the financial year.
Lowering the cost of imported LNG will also enable the government to gradually lower its subsidy payment to fertiliser companies. The government currently reimburses the difference between higher costs of production and the lower administered retail price of fertiliser to producers.
India is the fourth-largest importer of LNG in the world, sourcing 57% from Qatar, 17% from Nigeria, 6% from the US and 6% each from Angola and Australia 6%.