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Lacking long-term storage, India must rely on imports to manage LPG supply

March 12, 2026 4 min read Economics GS Paper 3 (Indian Economy Energy Security Infrastructure)
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What Happened

  • In 2024–25, India's domestic LPG production stood at approximately 13 million tonnes while consumption was around 31 million tonnes — a gap of 18 million tonnes met entirely through imports.
  • This broadly represents a 60-40 import-to-domestic split, with import dependence rising from 47% in 2015 to 60% today, driven by a rapid expansion of household LPG connections under the Ujjwala Yojana and rising commercial demand.
  • India lacks long-term LPG storage infrastructure — the two underground LPG caverns at Mangaluru and Visakhapatnam have a combined capacity of only about 1.4 lakh tonnes, less than half a month's requirement.
  • The ongoing West Asia conflict's disruption of Strait of Hormuz shipping — through which ~90% of LPG imports transit — exposed these structural vulnerabilities and forced emergency resort to alternative fuels and supply diversification.
  • Experts and policy analysts noted that India's LPG supply system is designed for continuous-flow operations rather than strategic stockpiling, leaving it structurally vulnerable to external shocks.

Static Topic Bridges

India's Energy Mix and Cooking Fuel Transition

India's transition from traditional biomass-based cooking fuels to clean LPG has been one of the most significant energy policy achievements of the last decade, but it has simultaneously created a new import dependency.

  • LPG connections grew from ~140 million in 2014–15 to over 320 million by 2025, driven by Pradhan Mantri Ujjwala Yojana (PMUY, launched 2016) which targeted BPL households.
  • India became the world's second-largest LPG consumer (after China) as a result of this rapid expansion.
  • LPG production is largely a byproduct of crude oil refining and natural gas processing — it cannot be independently ramped up without increasing overall refinery throughput or gas extraction.
  • The government's PAHAL/DBTL scheme (Direct Benefit Transfer for LPG) eliminated the manual subsidy and provided cash transfers to over 250 million beneficiaries, reducing leakage.

Connection to this news: The very success of the LPG expansion drive created structural import dependency; the 60-40 import ratio is a direct arithmetic consequence of consumption growing faster than domestic refining capacity.

Strategic Energy Reserves: Crude vs. LPG

India has invested significantly in strategic crude oil reserves but has no equivalent strategic LPG reserve, creating an asymmetric vulnerability in its energy security architecture.

  • Strategic Petroleum Reserves (SPR) for crude: ~5.33 million tonnes at Visakhapatnam, Mangaluru, and Padur — covering approximately 9–12 days of import requirements.
  • Hydrocarbon exploration and production (E&P) is governed by the OALP (Open Acreage Licensing Policy) and HELP (Hydrocarbon Exploration and Licensing Policy, 2016) — but these primarily target crude and gas, not LPG.
  • LPG storage infrastructure is predominantly above-ground bullet tanks at bottling plants — designed for distribution throughput, not multi-month strategic reserves.
  • Underground LPG caverns (Mangaluru, Visakhapatnam): 1.4 lakh tonnes combined — India's only LPG strategic reserve infrastructure.
  • Japan and South Korea maintain 90-day+ LPG strategic reserves; India has no equivalent policy mandate.

Connection to this news: The 2026 Hormuz crisis has triggered calls for India to establish a dedicated LPG strategic reserve policy, analogous to the SPR framework for crude oil.

Piped Natural Gas (PNG) as an LPG Alternative

A long-term structural solution to India's LPG import vulnerability lies in expanding the Piped Natural Gas (PNG) network, which would reduce household dependence on imported LPG cylinders.

  • City Gas Distribution (CGD) network: India's CGD rollout under PNGRB (Petroleum and Natural Gas Regulatory Board) has expanded to 295 geographical areas covering 97% of India's population and geography (as of 2023–24).
  • PNG connections: grew from ~2 million in 2014 to over 12 million by 2024–25; target is 100 million connections by 2030.
  • CNG for vehicles and PNG for households together constitute the "gas economy" vision articulated in India's National Gas Policy.
  • Natural gas imports (LNG) are also partially Hormuz-dependent, but the supply chain is more diversified (Australia, Qatar, USA) and LNG can be stored at import terminals.
  • PM Urja Ganga pipeline project connects eastern India to the natural gas grid — previously underserved by PNG infrastructure.

Connection to this news: Faster PNG expansion would insulate Indian households from LPG supply shocks, but the infrastructure rollout in semi-urban and rural areas will take years — making short-term LPG import dependency an unavoidable reality.

Key Facts & Data

  • LPG production (2024–25): ~13 million tonnes; LPG consumption: ~31 million tonnes.
  • Import-domestic split: approximately 60% imported, 40% domestic.
  • Import dependence trend: 47% in 2015 → 60% in 2025 (CAGR ~1.4 pp/year).
  • LPG imports via Hormuz: ~90% of imports transit the Strait of Hormuz.
  • Underground LPG storage: 2 caverns (Mangaluru + Visakhapatnam); combined ~1.4 lakh tonnes.
  • India's monthly LPG consumption: approximately 2.6 million tonnes (31 MT / 12).
  • PMUY connections: 100+ million BPL households.
  • PNG connections (2024–25): ~12 million; target 100 million by 2030.
  • CGD network coverage: 295 geographical areas, ~97% of India's population.