LPG Shortage: Impact on Economy and India’s Response

Liquefied Petroleum Gas (LPG) is one of the most important fuels used in India for cooking and commercial activities. It is mainly produced during crude oil refining and natural gas processing and consists of propane and butane. LPG plays a major role in daily life as millions of households, restaurants, hotels, and small food businesses depend on it for cooking. India is among the largest consumers of LPG globally. A large share of the population uses LPG cylinders for household cooking, making it a critical part of the country’s energy system. Apart from households, the hospitality sector and food industry rely heavily on LPG. Because of this widespread usage, any disruption in supply can quickly affect economic activity. Recently, concerns about LPG shortages have emerged due to supply disruptions linked to geopolitical tensions in the Middle East. India imports a significant portion of its LPG requirements from Gulf countries, making it vulnerable to global supply shocks. As a result, commercial LPG availability has tightened in some areas. Reports suggest that some restaurants and food businesses are facing difficulties due to limited LPG supply, and a few establishments have warned about temporary closures if the shortage continues. This could increase operating costs for the hospitality sector and may also lead to higher food prices. To manage the situation, the Indian government has asked refiners to increase LPG production by around 10 percent. The aim is to improve domestic supply and ensure that household consumption remains stable despite global disruptions. Major companies involved in LPG production and supply in India include Indian Oil Corporation, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, and GAIL (India) Limited. These companies operate refineries and gas processing plants that produce LPG. Overall, the LPG shortage highlights India’s dependence on energy imports.