Government Allocates 20% More Commercial LPG to States; Prioritises Auto Sector

The government has increased commercial LPG allocation to states and union territories by an additional 20%, taking total supply to 70% of pre-crisis levels, with priority given to industries, including the automobile sector, to support production continuity.

Earlier, curbs on commercial LPG supplies were introduced to prioritise household consumption following disruptions linked to the ongoing conflict in West Asia and disturbances in the Strait of Hormuz, a key route for global energy shipments.

LPG supply constraints are forcing many Tier 3 and Tier 4 component suppliers to scale back operations. Early signs of strain have emerged in a supply chain that relies on precise production schedules.

The latest additional allocation is aimed at stabilising industrial activity, particularly in sectors such as automotive, which depend on LPG for specialised heating and manufacturing processes.

“In addition to the existing 50% allocation, an additional 20% is now proposed, which would bring the total commercial LPG allocation to 70% of the pre-crisis level of packed non-domestic LPG,” Petroleum and Natural Gas Secretary Neeraj Mittal said in a letter to secretaries of all states and union territories on Friday.

The government said the additional allocation will be directed to sectors critical to industrial production and employment, with a clear focus on industries that support manufacturing supply chains.

“Additional allocation shall be given to industries, with priority for steel, automobile, textile, dye, chemicals, and plastics, which are labour-intensive and provide support to other essential sectors. Among these, priority shall be given to process industries or those requiring LPG for specialised heating purposes that cannot be substituted by natural gas,” the letter said.

India consumes about 31 million metric tonnes of LPG annually, with imports accounting for a significant share of supply. Nearly 90% of imported LPG moves through the Strait of Hormuz, highlighting the vulnerability of domestic supply chains to geopolitical disruptions.

Refiners have been directed to maximise LPG production and divert feedstock such as propane and butane from petrochemical manufacturing to fuel supply, as the government seeks to maintain stable operations across key industrial sectors, including automotive.