New Delhi, April 8, 2026: Amid escalating geopolitical tensions in Middle East, the Government of India has introduced a revised LPG allocation framework to ensure uninterrupted supply to critical industrial sectors and safeguard economic stability.
According to the Ministry of Petroleum and Natural Gas, the new formula prioritises bulk LPG supply for essential industries, including pharmaceuticals, food processing, polymers, agriculture, packaging, paints, steel, ceramics, glass, and aerosols—sectors integral to national supply chains.
Revised Allocation Mechanism
Under the updated policy, industrial units will receive up to 70% of their LPG consumption levels recorded prior to March 2026. However, the total allocation has been capped at 0.2 thousand metric tonnes per day across the sector.
Priority will be extended to industries where LPG is non-substitutable, ensuring continuity in production for units dependent on LPG as a core input.
Push for PNG Transition
In parallel, industries have been encouraged to transition to piped natural gas (PNG). Units are required to register with oil marketing companies and apply for PNG connections through city gas distribution networks. However, exemptions will be granted to sectors where LPG cannot be replaced due to technical or process-specific constraints.
State-Level Incentives and Reforms
The Centre has already allocated 70% of packaged non-domestic LPG to states, with an additional 10% allocation linked to reforms promoting PNG adoption.
States have been advised to:
- Circulate the Natural Gas and Petroleum Products Distribution Order, 2026
- Expedite utilisation of reform-linked LPG allocations
- Notify compressed biogas (CBG) policies at the earliest
Rising Demand for Small Cylinders
The policy shift comes amid a surge in demand for smaller LPG cylinders. Since March 23, nearly 7.8 lakh 5-kg free trade LPG cylinders have been sold nationwide. Daily sales have also spiked, crossing 1.06 lakh units on a single day, compared to an average of around 77,000 in February.
