India Sets LPG Production Targets to Cut Imports

The Indian government has, for the first time, established maximum Liquefied Petroleum Gas (LPG) production targets for both public and private sector refineries, including upstream companies. This strategic move aims to fortify the nation’s domestic supply buffer, directly addressing its significant vulnerability to imported cooking gas disruptions.

This initiative responds to supply chain fragilities, notably those exposed during the recent West Asia conflict. The new policy seeks to prevent future shortages and potential rationing by enhancing internal production capabilities.

Setting Domestic Production Quotas

An order from the Petroleum and Natural Gas Ministry, issued on August 13, outlines specific production levels for 21 entities. These combined targets aim for a potential output of 63,810 tonnes of LPG per day.

This ambitious target more than doubles India’s domestic LPG output from the fiscal year ending March 31, 2026. It is projected to cover approximately 70% of the nation’s daily consumption needs, with these limits activated during periods of supply constraint.

Reliance Industries Ltd.’s older refinery in Jamnagar, Gujarat, has received the largest individual quota, mandated to produce up to 18,000 tonnes of LPG daily. Public sector refineries, comprising 18 entities, collectively aim for 31,470 tonnes per day.

Russia’s Rosneft-backed Nayara Energy’s Vadinar refinery is tasked with 4,480 tonnes per day. Upstream gas producers and processors, including ONGC and GAIL, collectively contribute 6,460 tonnes per day to the new framework.

Understanding India’s LPG Dependency

India’s LPG consumption during the 2025-26 fiscal year reached 33.2 million tonnes, equivalent to approximately 91,000 tonnes per day. Over 64% of this consumption was met through imports, underscoring the nation’s reliance on external sources.

The Iran war significantly impacted the Strait of Hormuz, disrupting 90% of India’s imports from key nations like Saudi Arabia. During that crisis, domestic production was temporarily increased to about 55,000 tonnes per day, alongside emergency measures such as diverting petrochemical streams and restricting industrial sales.

A New Framework for Supply Security

This new policy framework moves beyond reactive emergency measures by establishing facility-specific benchmarks for LPG production. It mandates that companies maintain adequate infrastructure for LPG storage, evacuation, and transportation.

Refiners are also encouraged to pursue technological upgrades, including naphtha-to-LPG conversion and enhancements to fluid catalytic cracking units, to maximize their output. The government retains the authority to direct companies to increase LPG production for specified periods.

This directive power ensures consistent domestic availability and fair pricing across the country. The production schedule will undergo bi-annual reviews, allowing for the incorporation of new capacities and advancements in technology.