Government Increases LPG Allocation to 70% of Pre-March Levels for Critical Industrial Sectors

Government Announces Allocation of 70% of Pre-March LPG Consumption for Key Industries

On April 8, the government declared that industrial units in several sectors will now receive 70% of their pre-March 2026 bulk non-domestic LPG consumption level. The allocation applies to pharma, food, polymer, agriculture, packaging, paint, Uranium, heavy water, steel, seed, metal, ceramic, and other related industries.

The allocation is subject to an overall sectoral limit of 0.2 thousand tonnes per day. Industrial units in these sectors will receive 70% of their pre-March 2026 bulk non-domestic LPG consumption level, provided they meet specific criteria. Priority will be given to units requiring LPG for specialized purposes that cannot be substituted by natural gas.

Entities must be registered with Oil Marketing Companies (OMCs) and have applied for Piped Natural Gas (PNG) to City Gas Distribution (CGD) companies to avail bulk LPG under this allocation. However, industries where LPG is used as an integral input in the manufacturing process or for specialized purposes that cannot be substituted by natural gas are exempt from the requirement to apply for PNG.

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This decision follows the government's earlier allocation of 70% of commercial LPG cylinders in March to enable relief to industrial and commercial users amid the shortage of LPG arising from the West Asia conflict. Priority was given to labour-intensive sectors such as steel, automobiles, textiles, dyes, chemicals, and plastics, as they also support other essential industries.

Initially, the government had allocated only 20% of the average monthly requirement to commercial users with an additional 10% to states promoting transition from LPG to PNG. The oil ministry then issued an order on March 21, allowing an additional 20% allocation of commercial LPG to states, taking the overall allocation to 50%.

The disruption of the Strait of Hormuz due to the conflict in West Asia has impacted 90% of India's LPG supplies.

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