What Happened
- Commerce and Industry Minister Piyush Goyal stated India's intent to diversify its crude oil and coking coal import sources, expressing specific interest in high-quality US coking coal.
- India plans to purchase $500 billion worth of goods from the US over five years, covering energy products, aircraft, precious metals, technology products, and coking coal.
- India is currently dependent on two to three countries for coking coal, and expanding the supplier base would ensure competitive pricing and greater supply security.
- India's coking coal imports are currently worth approximately Rs 1.50 lakh crore and are projected to rise to Rs 3 lakh crore.
- Goyal clarified that buying crude oil, LNG, and LPG from the US is in India's "strategic interest" as part of source diversification, though actual purchasing decisions are taken by buyers, not mandated by trade deals.
- This comes in the context of the India-US Interim Trade Agreement and declining Russian crude oil imports.
Static Topic Bridges
India's Energy Security and Import Dependence
India's energy security remains a critical strategic concern given its high dependence on imported crude oil and growing demand driven by industrialisation and urbanisation.
- India's crude oil import dependence stood at approximately 89% in March 2025, making it the world's third-largest oil importer and consumer.
- Top crude oil suppliers to India: Russia (18-22%), Iraq, Saudi Arabia, UAE, Kuwait, and the United States (6-7%).
- India consumed approximately 5.7 million barrels per day (bpd) of oil in 2025.
- Strategic Petroleum Reserves (SPR): India maintains strategic reserves at three locations — Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur (2.5 MMT) — totalling 5.33 MMT, providing roughly 9.5 days of import cover.
- India has planned Phase II of SPR at Chandikhol (Odisha) and Padur (expansion) to increase capacity to 12 MMT.
- The International Energy Agency (IEA) recommends 90 days of import cover, highlighting India's vulnerability.
- India is diversifying imports from newer suppliers including Brazil, Libya, Egypt, and Brunei, as per the Economic Survey 2025-26.
Connection to this news: India's pivot toward US crude oil and coking coal represents a strategic diversification move that simultaneously addresses energy security concerns and strengthens the bilateral trade relationship with the US, particularly in the context of reducing dependence on Russian crude following US tariff pressures.
Coking Coal and India's Steel Industry
Coking coal (metallurgical coal) is an essential input for steel production via the blast furnace route, and India's rising steel output ambitions make secure coking coal supply a strategic priority.
- Coking coal is used to produce coke in coke ovens, which serves as both fuel and reducing agent in blast furnaces for steel production.
- India is the world's second-largest crude steel producer (after China), producing approximately 144 million tonnes in FY 2023-24.
- National Steel Policy 2017 targets 300 million tonnes of steel production capacity by 2030-31.
- India imports approximately 55-60 million tonnes of coking coal annually, primarily from Australia, which supplies over 70% of India's coking coal needs.
- India's domestic coking coal is typically of inferior quality (high ash content of 24-40%), making imports essential.
- Key coking coal importers: Australia (~70%), USA (~8-10%), Canada, Mozambique, and Russia.
- Coking coal imports are currently worth approximately Rs 1.50 lakh crore, projected to rise to Rs 3 lakh crore as steel capacity expands.
Connection to this news: Diversifying coking coal sources from the current Australia-dominated supply base to include US coal addresses concentration risk, while also serving as a trade balancing mechanism with the US under the $500 billion procurement framework.
India-US Trade Relations and the Interim Trade Agreement
The India-US economic relationship has been reshaped by the Interim Trade Agreement (ITA) signed in early 2026, which addresses tariff issues and establishes a framework for bilateral trade expansion.
- India-US bilateral trade exceeded $200 billion in 2024, making the US one of India's top trading partners.
- The US had imposed 50% tariffs on Indian goods, which were subsequently reduced after India committed to certain trade concessions under the ITA.
- Following the ITA, punitive tariffs of 25% imposed in August 2025 specifically as penalty for Indian purchases of Russian crude were withdrawn on February 6, 2026, after India committed to halting Russian oil imports.
- India has committed to purchase $500 billion in US goods over five years, including energy, aircraft, and technology.
- India-US trade deficit has been a contentious issue, with the US running a deficit of approximately $35.3 billion with India in 2024.
- Key India-US trade forums: Trade Policy Forum (TPF), Commercial Dialogue, and CEO Forum.
Connection to this news: The energy diversification push is intricately linked to the broader trade deal architecture, where increasing US crude oil and coking coal purchases helps India address the trade deficit concerns while securing the rollback of punitive tariffs.
Key Facts & Data
- 89%: India's crude oil import dependence (March 2025)
- $500 billion: India's planned procurement from the US over five years
- Rs 1.50 lakh crore: Current annual value of India's coking coal imports
- Rs 3 lakh crore: Projected future value of coking coal imports
- 5.33 MMT: India's Strategic Petroleum Reserve capacity (Visakhapatnam + Mangaluru + Padur)
- 300 MT: National Steel Policy 2017 target for steel production capacity by 2030-31
- 55-60 MT: India's annual coking coal imports
- Australia (~70%): Dominant supplier of India's coking coal
- $200 billion+: India-US bilateral trade (2024)
- 25% tariff: Withdrawn February 6, 2026 after India's commitment on Russian crude