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India Revises LPG Allocation to Shield Key Industries from Middle East Turmoil

The Indian government has introduced a revised LPG allocation formula to secure supply for critical industries including pharmaceuticals, food processing, and agriculture amidst rising Middle East tensions. The policy guarantees up to 70% of an industry's LPG consumption levels recorded before March 2026, with priority given to units where LPG is irreplaceable by natural gas. An overall sectoral cap of 0.2 thousand metric tonnes per day has been set, and states can earn an additional 10% allocation by implementing PNG adoption reforms. The move coincides with a reported surge in demand for smaller, free-trade LPG cylinders across the country.

Key Points: New LPG Allocation Formula for Pharma, Food, Agri Amid Crisis

  • New formula ensures bulk LPG for essential industries
  • Supply capped at 0.2 TMT/day for sector
  • 70% allocation of pre-March 2026 consumption levels
  • States get reform-linked extra 10% allocation
2 min read

Centre introduces new LPG allocation formula to support key industries amid Middle East tensions

Indian government introduces new LPG supply formula for essential industries like pharmaceuticals and food processing, ensuring 70% of pre-2026 levels amid Middle East tensions.

"priority will be given to factories where LPG cannot be replaced by natural gas - Ministry of Petroleum and Natural Gas"

New Delhi, April 8

Amid rising tensions in the Middle East, the Indian government on Wednesday introduced a new formula for LPG allocation aimed at supporting critical sectors such as pharmaceuticals, food processing, and agriculture.

According to the Ministry of Petroleum and Natural Gas, the revised policy will ensure bulk LPG supply to a wide range of industries, including pharma, food, polymers, agriculture, packaging, paints, steel, ceramics, glass, and aerosols.

These sectors are considered essential for the country's economic stability and supply chains.

Under the new formula, industries will receive up to 70 per cent of their LPG consumption levels recorded before March 2026.

However, the overall allocation has been capped at 0.2 thousand metric tonnes per day for the entire sector.

The government has clarified that priority will be given to factories where LPG cannot be replaced by natural gas.

In such cases, these units will receive LPG supply first to ensure uninterrupted production.

At the same time, industries are required to register with oil marketing companies and apply for piped natural gas (PNG) connections through city gas distribution firms.

However, this requirement has been relaxed for units where LPG is an essential part of the manufacturing process and cannot be substituted.

The Centre has also already allocated 70 per cent of packaged non-domestic LPG to states.

An additional 10 per cent allocation will be given to those states that implement reforms related to PNG adoption.

The government has asked states to take three key steps: circulate the Natural Gas and Petroleum Products Distribution Order 2026 among all departments, quickly utilise the reform-linked LPG allocation benefits, and notify policies related to compressed biogas at the earliest.

Earlier, the ministry reported a sharp rise in demand for smaller LPG cylinders. Since March 23, around 7.8 lakh 5-kg free trade LPG cylinders have been sold across the country.

On a single day earlier this week, sales crossed 1.06 lakh cylinders, compared to an average of about 77,000 per day in February.

- IANS

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Reader Comments

P
Priya S
Good step, but what about the common man? The article says sales of 5-kg cylinders have shot up. Are we heading for another shortage and price hike for households? 🧐 The focus should be balanced.
R
Rohit P
Finally, some clarity for MSMEs in ceramics and glass! The process to register with OMCs was a nightmare. The 70% allocation based on pre-Mar 2026 levels seems fair. Hope the states act quickly on the reforms to get that extra 10%.
S
Sarah B
As someone working in the packaging industry, this is a relief. Our production had started to slow down due to uncertainty. Prioritizing units where LPG can't be replaced by PNG makes complete sense. It's a smart, targeted policy.
V
Vikram M
The cap of 0.2 TMT per day for the entire sector seems very low on paper. I respectfully disagree with the planners on this one. With so many essential industries listed, this might lead to internal competition and lobbying, defeating the purpose of a fair formula.
K
Kavya N
Pushing for PNG and compressed biogas adoption alongside is the right long-term vision. 🇮🇳 We cannot be forever dependent on imported LPG. This policy nudges industries towards cleaner, domestic alternatives. Good forward thinking!

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