LPG Prices Continue to Rise Globally, Yet India Remains a Leader in Affordability

India's Domestic LPG Prices Rise for Second Time in Three Months Amid Global Energy Disruptions

India has raised domestic LPG prices for the second time in three months, as the ongoing US-Iran conflict continues to disrupt global energy markets. Despite the increase, Indian households continue to enjoy some of the lowest cooking gas prices in the world, paying significantly less than consumers in neighbouring countries and advanced economies alike.

From June 7, the price of a 14.2-kg domestic LPG cylinder in Delhi has risen by Rs 29 to Rs 942. The increase follows a Rs 60 hike announced in March as geopolitical tensions in West Asia sent crude oil and natural gas prices sharply higher.

The actual burden on Indian consumers remains far lower than the international market would suggest. According to the Ministry of Petroleum and Natural Gas, the cost of supplying a domestic LPG cylinder has now crossed Rs 1,600 because of soaring global prices. Yet a regular household in Delhi pays Rs 942, while beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) effectively pay only Rs 642 after receiving a direct benefit transfer of Rs 300 on each of their first four refills every year.

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This means even non-Ujjwala consumers are paying roughly Rs 700 less than the market-linked cost of a cylinder, while PMUY households receive an even larger level of support. The government's intervention has become increasingly important as the conflict involving Iran has rattled global energy markets. The Strait of Hormuz, through which a substantial share of the world's oil and gas supplies move, has faced severe disruptions, driving up international fuel prices.

India's LPG import costs are linked to Saudi Contract Prices (CP), the benchmark used in global LPG trade. Before the latest crisis, the Saudi CP for LPG stood at around $543 per tonne in February. Following the disruption of Gulf energy supplies, the benchmark surged to $775 per tonne in April and rose further to about $790 per tonne in June.

Overall, the international benchmark has climbed by around 46 per cent in just four months. Ordinarily, such a sharp increase would have translated into substantially higher prices for consumers. Instead, the Centre has absorbed a significant part of the increase through a combination of subsidies and under-recovery support to public sector oil marketing companies.

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The scale of this support becomes evident when India's LPG prices are compared with those in other countries.

According to government estimates, the effective Ujjwala price remains about 60 percent below international market levels, while even non-PMUY consumers are paying around 45 percent less than the actual import-linked cost. The Petroleum Ministry, on June 7, said the protection extended to consumers is separate from the direct subsidy provided to Ujjwala beneficiaries. The gap between the actual cost of LPG and the regulated retail price is being absorbed largely by public sector oil marketing companies, with government support helping offset part of the burden.

The cumulative under-recovery on domestic LPG reached around Rs 60,000 crore by the end of the last financial year, up sharply from Rs 41,338 crore a year earlier. To help manage these losses, the Union Cabinet has approved Rs 30,000 crore in compensation to oil marketing companies. India has also managed to avoid the supply disruptions seen elsewhere despite the turmoil in West Asia, said the Ministry in its statement.

The Centre increased domestic LPG production by more than 60 percent, from around 32 thousand metric tonnes to 52 thousand metric tonnes, while simultaneously diversifying imports to countries including the U.S., Canada and Algeria. Indian-flagged vessels continued transporting energy cargoes through the Strait of Hormuz, helping ensure uninterrupted supplies of LPG and crude oil.

Additional measures were also taken to prevent misuse of subsidised LPG. OTP-based delivery verification has been expanded to cover about 90 percent of deliveries, reducing diversion of domestic cylinders to commercial users.