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India Reduces Custom Duty on LNG by 50%

India has halved the LNG custom duty to 2.5% from the earlier 5% at terminals as a part of its strategy to become a "gas-based economy", which will boost the demand for LNG in the country.

New Delhi: In the Union Budget 2017-18, Finance Minister Arun Jaitley announced the measure to reduce custom duty on LNG by fifty percent to 2.5% thereby making the import of LNG cheaper. The move will greatly help LNG consumers, like power and fertilizer companies, to off-take more LNG. Moreover, this step has been taken in-line with country’s strategy to become a gas based economy. The Government of India is intended to double its LNG import capacity from the present 25 million tonnes to 50 million tonnes in the next few years.

TechSci Research depicts that the rise in demand of LNG in India and other developing countries along with favorable government policies will surge the demand for LNG, for power generation. Growing focus on expansion of gas pipeline infrastructure, rising demand for natural gas from downstream sectors, declining LNG prices coupled with implementation of favorable government policies is boosting demand for LNG across the globe. Increasing focus on development of adequate support infrastructure in various developing as well as developed economies is expected to boost LNG demand in the coming years.

According to released report of TechSci Research, Global LNG Market Demand & Supply Analysis, By Region, By Country, By LNG Terminal, Competition Forecast and Opportunities, 2011-2025”, global LNG supply market is forecast to exhibit a CAGR of over 5% during 2016-2025, on account of rising demand for cleaner fuels; oversupply of LNG due to liquefaction capacity additions in Australia, US and Papua New Guinea; and declining prices of LNG over the last few years. In 2015, global LNG export market was dominated by Qatar and Australia, due to huge natural gas reserves and large liquefication capacities in these countries. Increase in spot market purchase is expected to keep LNG prices under check in Asia-Pacific and Europe.

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