LPG supply shock drives India’s shift towards piped gas network

India is using a cooking gas crisis triggered by the Iran war to plug gaps in its domestic distribution system while strengthening infrastructure to accelerate a shift towards piped gas, as it seeks to reduce liquefied petroleum gas (LPG) imports and subsidy spending.

The government has invoked emergency powers to ensure that limited LPG supplies are directed towards household use and will halt supplies after three months for customers linked to piped gas connections.

Last month, India issued an order setting timelines for new pipeline approvals, with permissions deemed granted if authorities fail to respond within the specified period. The order also requires landowners and local authorities to allow pipeline access.

“Witness rapid expansion of CGD (city gas distribution) network across the country … a crisis turned into an opportunity, opens new tab”, said Neeraj Mittal, the secretary of the Ministry of Petroleum and Natural Gas, on social media.

In March, India added 580,000 new households to its piped gas supply network, the government said on Tuesday, compared with 342,300 a year earlier.

India is the world’s No. 2 importer of LPG, meeting about 60 per cent of its needs through overseas purchases. It imported about 22 million metric tons of LPG in 2025, mostly from the Middle East, spending nearly $12 billion.

LPG disruption exposes import dependence

The world’s most populous country has been hit by LPG supply disruptions, exposing vulnerabilities in its import-dependent energy system and prompting officials to take steps to manage supply and demand.

India’s LPG imports could decline by about 10 to 15 per cent by 2030 due to these measures, including the expansion of piped gas, said Prashant Vashist of credit-rating agency ICRA.

India meets about half of its natural gas consumption through imports of liquefied natural gas.

“This (shift to natural gas) would cut the companies’ revenue losses on the sale of domestic LPG and would also reduce the subsidy burden,” he said.

Shifting consumers to piped gas, which is sold closer to market rates, would help contain fiscal pressures while improving supply efficiency.

Retailers sell LPG to commercial users at market prices, while supplying cooking fuel to households at subsidised rates that are about 56 per cent cheaper. Last year, limited compensation to retailers cost the government $3.4 billion.

Since the start of the war, suppliers including Indraprastha Gas, Mahanagar Gas, GAIL Gas and Bharat Petroleum Corp have offered incentives such as reductions in installation charges for piped gas connections.

India has 333.7 million household LPG customers, including 106 million low-income families receiving subsidised gas.

Local gas suppliers have been connecting about 2 million to 2.5 million consumers annually, taking the total to 16.3 million at the end of December.

Recent policy changes are expected to increase that pace to about 7.5 million connections annually, said Gajendra Singh, former member of the Petroleum and Natural Gas Regulatory Board, taking the national total to between 35 million and 40 million by 2030.

“This expansion would cut LPG imports and offer a safer, more convenient alternative for households,” he said.

(With inputs from Reuters)