The Fuel That Feeds India: Inside the LPG Economy

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Published 27 Mar 2026

India runs on LPG, which is used in everything from morning chai at home to commercial kitchens and small industries across the country.

As of now, 40% of India’s LPG demand is met domestically, while the remaining 60% is imported.

A large share of these imports flows through a single, vulnerable chokepoint: the Strait of Hormuz.

With rising tensions in the Middle East, this dependence has come back into focus.

Yet, despite the uncertainty, India’s strategic foreign relations have ensured that LPG shipments continue, avoiding a complete halt.

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What is LPG?

LPG (Liquefied Petroleum Gas) is a flammable fuel produced during crude oil refining and natural gas processing.

It is used as cooking fuel in homes and restaurants, for industrial heating, as automotive fuel in the form of LPG, and even in agriculture for activities such as crop drying and greenhouse operations.

Few fuels in India have this level of versatility and penetration.

The scale of India’s LPG market reflects this.

India is the world’s second-largest consumer and importer of LPG, with monthly consumption reaching nearly 3 million tonnes.

The country now has over 33.07 crore LPG consumers, supported by a distribution network of more than 25,000 distributors. LPG exports in 2025 stood at $0.427 billion.

Looking at consumption patterns reveals an even clearer picture.

Between April and January FY26, domestic households accounted for the overwhelming majority of LPG usage, consuming 24,120 thousand metric tonnes, or about 86% of total demand.

But does India produce enough LPG to meet this demand?

India’s LPG production has grown steadily, from 7.6 MMT in FY04 to 12.8 MMT in FY25.

But our consumption exceeds production. In FY25, total consumption reached 31.3 MMT.

This means domestic production currently meets only around 40% of the country’s demand, with the remaining 60% fulfilled through imports.

And where these imports come from matters significantly.

India sources the bulk of its LPG from the Middle East, with the UAE accounting for 40% of imports, followed by Qatar, Kuwait, Saudi Arabia and USA.

This concentration makes the supply chain efficient, but also vulnerable.

Nearly 90% of India’s LPG imports pass through the Strait of Hormuz, making it one of the most critical energy chokepoints for the country.

In FY25 alone, India imported LPG worth $12.47 billion, with the majority of shipments routed through this narrow passage.

Any disruption, whether geopolitical tensions, shipping risks, or supply constraints, can quickly ripple into domestic markets, affecting both supply stability and pricing.

So, what is the government doing to reduce import dependence?

To reduce LPG import dependence, the government is taking a multi-pronged approach.

It is expanding the PNG network to shift households from LPG to piped gas, with pipeline length rising from 15,340 km in 2014 to 24,945 km in 2024.

At the same time, refining capacity is being scaled up from 256.8 MMTPA to 309.5 MMTPA by 2028, which will boost domestic LPG production.

Additionally, oil marketing companies are being supported with ₹30,000 crore to ensure uninterrupted procurement, supply, and ongoing capacity expansion.

Within India, LPG distribution is dominated by three major public sector companies.

Indian Oil Corporation (IOCL) leads with a 45.23% market share and over 12,900 distributors, followed by Bharat Petroleum and Hindustan Petroleum.

Private players such as Reliance Industries, Aegis Logistics, and SUPERGAS operate on a much smaller scale.

Together, this network ensures last-mile delivery across both urban and rural India.

A major shift in LPG adoption came with the launch of the Pradhan Mantri Ujjwala Yojana (PMUY) in 2016.

The scheme aimed to provide free LPG connections to women in low-income households, promoting the use of clean cooking fuel and reducing reliance on traditional sources like firewood.

Over 10 crore beneficiaries have been added under the scheme, significantly expanding LPG penetration in rural India.

Looking ahead, demand is expected to remain strong.

India’s LPG consumption is projected to rise from 31.3 million tonnes in FY25 to around 33-34 million tonnes in FY26.

At the same time, efforts are underway to diversify import sources, with countries like the US, Norway, Canada, and Russia emerging as alternative suppliers.

There is also a push to strengthen energy security through higher domestic production and the expansion of piped natural gas (PNG) infrastructure.

Even so, the core reality remains unchanged.

LPG powers millions of Indian kitchens every day, but with 60% import dependence and heavy reliance on global trade routes, it remains closely tied to international dynamics.

What happens in distant energy corridors can still shape everyday life at home.

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