Brief Overview
- The ongoing war between the U.S.–Israel and Iran has created stress on India’s Liquefied Petroleum Gas (LPG) supply.
- India’s LPG sector was already highly import-dependent and supported by government subsidies.
- In the previous year, the government paid ₹30,000 crore to Oil Marketing Companies (OMCs) such as IOCL, BPCL and HPCL, to compensate losses from selling LPG at lower prices amid rising global prices.
- India produces only about 40% of its LPG requirement, while the remaining 60% is imported.
- LPG consumption has increased significantly due to the expansion of clean cooking initiatives.
Key trends:
- Active domestic LPG consumers increased from 1,486 lakh (2015) to 3,305 lakh (July 2025) i.e. a rise of over 120% in a decade.
- Household LPG coverage increased from 62% in 2016 to nearly 100% today, following the launch of the Pradhan Mantri Ujjwala Yojana.
- Import trends:
- LPG imports rose from 16.48 million metric tonnes (MMT) in 2020-21 to over 18 MMT in 2025-26.
- Import dependence is concentrated in West Asian suppliers:
- Qatar – 34% of imports
- UAE – 26%
- Kuwait – 8.3%
- The Strait of Hormuz, located between Iran and Oman, is a critical global energy shipping route through which a large share of LPG shipments pass.
Ongoing Challenges
- The closure of the Strait of Hormuz since March 1 has disrupted LPG shipments to India.
- Rising global energy prices and supply disruptions are placing financial pressure on domestic fuel pricing and subsidies.
- The challenge is intensified because the Union Budget reduced LPG subsidy allocation by 27%, from ₹15,121 crore to ₹11,085 crore.
Emergency measures taken by the government include:
- The Ministry of Petroleum and Natural Gas directed domestic refiners to maximise LPG production.
- Refiners were instructed to divert their entire LPG output to public sector OMCs. Further, the OMCs were directed to prioritise domestic consumers.
- Companies were barred from using LPG for petrochemical production.
- The conflict also affects Liquefied Natural Gas (LNG) supplies, as India’s LNG imports reached 27 MMT in 2024-25, double the 13.5 MMT imported in 2011-12.
- About half of India’s LNG imports come from Qatar, linking LNG supply risks to the same geopolitical conflict zone.
Way Forward
- Diversify Energy Imports: India should reduce over-reliance on West Asian suppliers by expanding sourcing from other regions.
- Strengthen Domestic Production: Increasing domestic refining and LPG production can reduce vulnerability to global supply shocks.
- Build Strategic Energy Resilience: Developing supply buffers and alternative shipping routes can mitigate risks from disruptions such as those in the Strait of Hormuz.
- Improve Energy Planning: Policies must balance clean cooking expansion with supply security to manage rising LPG demand sustainably.
