India’s Ministry of Petroleum & Natural Gas (MoPNG) has introduced a calibrated LPG allocation policy for industry, signalling a strategic response to supply disruptions and structural energy transition. Under the directive issued by Secretary Dr. Neeraj Mittal, bulk LPG supply to key sectors—including pharma, food processing, steel, ceramics, agriculture and heavy industries—has been capped at 70% of pre-March 2026 consumption, with a ceiling of 0.2 TMT per day.
From an economic standpoint, the policy reflects a dual objective: rationing scarce supply while incentivising a shift towards Piped Natural Gas (PNG). An additional 10% allocation linked to PNG reform milestones creates a policy lever to accelerate infrastructure adoption. However, sectors where LPG is a non-substitutable manufacturing input—such as heavy water and uranium—have been prioritised and exempted from mandatory PNG transition, limiting production disruptions.
The move comes amid a sharp external shock. India, which imports 60% of its LPG—nearly 90% via the Strait of Hormuz—witnessed a 45% drop in imports, from 2.04 million tonnes in February to 1.12 million tonnes in March, following tensions in West Asia.
Despite rising global prices, Prime Minister Narendra Modi and Petroleum Minister Hardeep Singh Puri have opted for price stabilisation through cost absorption by OMCs. States have been tasked with accelerating PNG rollout and implementing CBG policy, underscoring a broader push towards energy security and diversification.