By Sadananda Mohapatra, Senior Business Journalist
India’s Cooking Gas Balancing Act: Supply Managed, But the Clock Is Ticking
In three months, the price of a domestic LPG cylinder in Delhi has climbed from Rs 853 to Rs 942 ($8.93 to $9.86). For the more than 106 million households enrolled under the Pradhan Mantri Ujjwala Yojana (out of 329 million total domestic LPG consumers), the number of subsidised refills available annually has been cut from nine to four. The government maintains there is no LPG supply problem. Its own actions suggest the situation is considerably more complicated.
The supply shock was real. Conflict in West Asia disrupted flows through the Strait of Hormuz, through which roughly 54 per cent of India’s LPG imports were routed. Domestic production was the first lever pulled : output at refineries and fractionators was raised from about 32,000 tonnes per day to about 52,000 tonnes per day, according to a Ministry of Petroleum and Natural Gas statement on June 8, with several refineries now running above 100 per cent capacity. Yet as recently as mid-May, India was estimated to be running roughly 400,000 barrels per day below pre-war LPG supply levels, with domestic production yet to fully offset the import collapse. April LPG consumption fell 16.2 per cent year-on-year to 2.2 million metric tonnes, against a pre-crisis monthly average of roughly 2.83 million metric tonnes.
The import basket has been simultaneously rewired. Before the crisis, Gulf suppliers accounted for roughly 90 per cent of India’s LPG imports. By May 2026, preliminary cargo tracking data puts the United States at approximately 55 per cent of total imports, or around 666,000 tonnes. The Gulf’s combined share has fallen to roughly 16 per cent. The shift has a structural foundation. Indian PSU oil companies (IOCL, BPCL and HPCL) had signed a one-year contract to import 2.2 million tonnes of LPG from the US Gulf Coast in 2026, supplied by Chevron, Phillips 66 and TotalEnergies. Washington’s hand is visible beyond the supply contract: a US sanctions waiver enabled Indian tankers to keep transiting the Strait, with India bringing out what the government described as the largest number of LPG vessels of any country through the waterway, without paying any toll.
The fiscal cost of holding the system together is substantial. Total under-recoveries on domestic LPG reached Rs 60,000 crore [$6.28 billion] by the end of FY 2025-26. The Union Cabinet has approved compensation of Rs 30,000 crore [$3.14 billion] , covering half the gap. The two consumer price hikes, the Ujjwala quota cut and a push to shift households to piped natural gas have all served to compress demand and limit further bleeding.
India has longer-term plans. The Ministry of Petroleum and Natural Gas has directed GAIL, Engineers India and Indian Oil Corporation to prepare a feasibility report for a proposed Rs 40,000 crore [$4.19 billion] deep-sea gas pipeline connecting Oman directly to Gujarat, designed to bypass the Strait entirely. The project, if cleared, would take five to seven years to build.
For now, India has managed. But managing on maxed-out refineries, halved Ujjwala entitlements, and a cooking gas price approaching Rs 1,000 a cylinder is not the same as supply security.
Joules Capsule
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About the Author:
Sadananda Mohapatra is a veteran business journalist with decades of experience covering India’s energy, industry, and economic landscape. With stints at reputed financial news publications like The Business Standard & NewsWire18, he reported extensively on India’s power sector, minerals policy, coal and energy regulation, and industrial developments — building a deep, ground-level understanding of the global energy economy. His work spans corporate affairs, infrastructure, and policy analysis, with a particular focus on eastern India’s resource-rich industrial corridor. He currently writes on the global energy landscape through his newsletter, The Joule’s Stack.
