What Happened
- LPG consumption in India fell to 1.147 million tonnes in the first fortnight of March 2026 — a 17.3% decline from the 1.387 million tonnes consumed in the same period in 2025.
- The drop is also 26.3% lower than the 1.557 million tonnes consumed in the first half of February 2026, reflecting a sharp deterioration in supply since the Strait of Hormuz was effectively blockaded.
- India imports approximately 60% of its LPG requirements, with around 90% of those imports normally transiting the Strait of Hormuz from Persian Gulf suppliers.
- The government directed all Indian refineries to maximise LPG yields by channelling all C3 and C4 hydrocarbon streams (propane, butane, propylene, butenes) exclusively to Oil Marketing Companies for domestic cooking gas.
- Domestic refinery LPG production was increased by approximately 30% through emergency directives to partially offset the import shortfall.
Static Topic Bridges
LPG in India's Energy Mix and Welfare Architecture
Liquefied Petroleum Gas (LPG) — a mixture of propane and butane — is India's primary household cooking fuel, replacing traditional biomass (wood, dung cakes) in over 320 million homes since the Pradhan Mantri Ujjwala Yojana (PMUY) expanded access from 2016. It sits at the intersection of energy policy, women's health (indoor air pollution reduction), and social protection.
- PMUY launched in 2016; target was 80 million Below Poverty Line (BPL) households; surpassed 100 million connections by 2023.
- India has approximately 330+ million total LPG subscribers (domestic + commercial), making it the world's second-largest LPG consumer after China.
- LPG is subsidised through Direct Benefit Transfer for LPG (DBTL — Pahal scheme): subsidy transferred directly to Aadhaar-linked bank accounts, not as a price cap.
- Oil Marketing Companies (OMCs) — Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum — manage distribution through ~24,000 distributors.
- India's monthly LPG consumption averages 2.3–2.5 million metric tonnes under normal conditions.
Connection to this news: The 17.3% consumption drop in March 2026 is not a voluntary reduction — it reflects forced supply rationing. Because LPG subsidies go to households already identified as poor, the supply crunch disproportionately affects the very beneficiaries PMUY was designed to protect.
Petroleum Refinery Operations: LPG Maximisation
India has 23 oil refineries with a combined refining capacity of approximately 254 million metric tonnes per annum (MMTPA) — the world's fourth-largest refining capacity. LPG is a by-product of crude oil refining as well as natural gas processing; its yield can be partially adjusted through operational decisions.
- C3 streams (propane/propylene) and C4 streams (butane/butylene/isobutane) are intermediate hydrocarbons in the refining process that can either be channelled to LPG production or used as petrochemical feedstock.
- An emergency directive to maximise LPG yield involves routing these streams to OMCs rather than selling them to fertiliser plants or petrochemical producers.
- The government issued an LPG Control Order on March 8, 2026, directing this reallocation across all refineries under the Essential Commodities Act, 1955.
- India's 30% production increase through refineries, while significant, can only partially compensate for the approximately 60% of supply that normally comes through imports.
- Public sector refineries (IOC, BPCL, HPCL, MRPL, OIL India) were the primary entities covered by the directive.
Connection to this news: The government's ability to direct refinery output reallocation illustrates the Emergency Powers under the Essential Commodities Act that allow the Centre to override commercial considerations in the interest of civilian energy supply.
India's LPG Import Geography and Diversification Strategy
India's LPG import portfolio has traditionally been concentrated in the Middle East — Saudi Arabia's Aramco, UAE's ADNOC, and Qatar have been major suppliers. This concentration, combined with the geography of the Strait of Hormuz, creates a single-point-of-failure risk that the 2026 crisis has concretely realised.
- India secured a 2.2 million metric tonne per annum (MTPA) US LPG supply contract for 2026 — approximately 10% of annual imports — as a diversification measure predating the current crisis.
- Alternative routes: US and Norwegian LPG exports travel via the Cape of Good Hope route, bypassing the Strait of Hormuz entirely, but with longer transit times (25–35 days vs. 10–15 days from the Gulf).
- Other diversification partners being explored: Canada, Russia, Australia (for LNG-to-LPG flexibility).
- India's monthly LPG import requirement is approximately 1.4–1.5 million tonnes; the two tankers that arrived on March 15–17 carried 92,712 tonnes combined — roughly 6% of monthly import needs.
- The minimum re-booking gap for domestic cylinders was extended from 21 days to 25 days as a demand management measure, while Delivery Authentication Code (DAC) coverage was expanded from 50% to 90% to prevent diversion and hoarding.
Connection to this news: The 17.3% consumption fall is a direct consequence of this import geography — the only meaningful short-term relief comes from re-routing non-Gulf LPG or negotiating individual vessel passages, both of which are inherently constrained in the near term.
Key Facts & Data
- LPG consumption first fortnight of March 2026: 1.147 million tonnes (down 17.3% year-on-year)
- Comparison: 1.387 MT (March 2025 same period); 1.557 MT (first half of February 2026)
- India imports ~60% of LPG; ~90% of those imports transit Hormuz
- Domestic refinery LPG production increased ~30% through emergency directive
- LPG Control Order issued March 8, 2026 — all C3/C4 streams redirected to OMCs
- PMUY beneficiaries: 100+ million BPL household connections
- Total LPG subscribers: ~330+ million (India is world's 2nd largest LPG consumer)
- India's US LPG supply deal: 2.2 MTPA (~10% of annual imports)
- Minimum rebooking gap extended: 21 days → 25 days
- DAC coverage expanded: 50% → 90%