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India Boosts Industrial LPG Quota to 70%, Cuts Fuel Taxes Amid Crisis

The Petroleum Ministry has increased the allocation of non-domestic LPG to states, raising it to 70% of pre-crisis levels to provide relief to industrial operations. Priority for the additional allocation is given to key labour-intensive sectors like steel, automobile, and textiles, especially where LPG cannot be substituted by natural gas. In a parallel move, the government slashed excise duties on petrol and diesel to protect consumers from fuel price spikes. These measures come against the backdrop of a global energy crisis triggered by conflict in West Asia affecting oil supplies through the Strait of Hormuz.

Key Points: India Raises LPG Quota to 70%, Slashes Fuel Excise Duties

  • LPG quota raised to 70% of pre-crisis level
  • Priority for labour-intensive industries
  • Fuel excise duties slashed
  • Move amid West Asia energy crisis
2 min read

Petroleum Ministry raises states' non-domestic LPG allocation quota to 70% of pre-crisis level

Government increases non-domestic LPG allocation for industries and cuts petrol, diesel excise duties to mitigate impact of global energy crisis.

"Additional allocation shall be given to industries with priority to steel, automobile, textile, dye, chemicals, and plastics - Petroleum Ministry"

New Delhi, March 27

The secretary in the Ministry of Petroleum Neeraj Mittal on Friday wrote to all Chief Secretaries of States and Union Territories stating that several states have carried out some or all the reforms regarding the allocation of non-domestic LPG to various sectors. On March 16 the states had been allotted 40% of pre-crisis quota and another 10% was allotted based on achievement of certain reforms to promote PNG.

The secretary informed that in addition to the existing 50% allocation as made earlier, an additional 20% is now proposed, that would bring the total commercial LPG allocation to 70% of the pre-crisis level of the packed non-domestic LPG.

The secretary said this additional 20% allocation shall adhere to the following stipulations:

1. Additional allocation shall be given to industries with priority to steel, automobile, textile, dye, chemicals, and plastics, which are labour-intensive and provide support to other essential sectors. Among these, priority shall be given to process industries or those requiring LPG for specialised heating purposes that cannot be substituted by Natural Gas.

2. The conditions mentioned in paragraph (b) of the letter dated March 21 mentioned above regarding registration with OMCs, and in paragraph (c) regarding application for PNG to CGD entities must also be fulfilled by entities to receive LPG under this additional 20%. If industries specified in paragraph 1 of this letter where LPG is used in the process and for special purposes which cannot be substituted by Natural Gas, such requirement would stand waived.

The secretary also urged all states to avail of the 10% reform-based allocation immediately, if they have not already done so. The secretary said that with this the allocation to commercial/industrial LPG will rise to 70% (with 10% reform based) and enable relief to industrial operations in the state.

Meanwhile, in another move to protect consumers from any spike in fuel prices due to the West Asia crisis, the government on Friday slashed excise duties for petrol and diesel bringing them down to Rs 3 per litre of petrol and zero for a litre of diesel. Windfall tax on export of diesel has been set at 21.5 rupees/litre.

The reduction comes amid a global energy crisis due to the US-Israel war on Iran and the consequent Tehran-imposed blockade on the Strait of Hormuz, through which a fifth of the world's crude oil and gas supply, between 20 and 25 million barrels per day, is shipped. Before the conflict, India bought 12 to 15 per cent of that oil.

- ANI

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Reader Comments

S
Sarah B
Good to see a policy that links reform with reward. The 10% reform-based allocation is a smart way to get states to push for PNG adoption. However, the bureaucracy involved in registration with OMCs and application to CGD entities could still be a hurdle for smaller units. Streamlining that process is key.
P
Priyanka N
Finally some relief! My family runs a small dyeing unit in Surat. The LPG shortage was crippling. 70% of pre-crisis level should help us get back on track. The waiver for process industries that can't use Natural Gas is very practical. Hope the states act fast now.
A
Aman W
The excise duty cut is more impactful for the common man than the LPG quota news. Petrol at Rs 3 less per litre will ease the pressure on household budgets. The global situation is worrying though. A fifth of the world's oil through Hormuz? We need long-term energy security, not just crisis management.
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Karthik V
While the intent is good, the implementation will be the real test. Which state has achieved the reforms? The letter says "several states" have done "some or all". This lack of transparency is a problem. We need a clear dashboard showing state-wise reform status and allocation.
M
Michael C
Interesting to see the policy focus on labor-intensive sectors. This should help protect jobs during this global energy instability. The windfall tax on diesel exports is also a shrewd move to keep domestic supply steady. Overall, a balanced approach from the ministry.

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