Context
India’s LPG supply model faces a structural crisis driven by 60% import dependence, with ~90% of imports transiting the volatile Strait of Hormuz. With >85% of supply destined for household kitchens, limited storage (only 1.5 days of demand in deep caverns) makes the system highly vulnerable to geopolitical shocks in West Asia.
Structural Vulnerabilities in India’s LPG Model
- High Import Dependence: India depends on imports to supply approximately 60% of its LPG requirement. Local manufacturing is no longer meeting the demand, which has been increasing very quickly because of the Pradhan Mantri Ujjwala Yojana’s success.
- Geographical Concentration & Chokepoint Risk: West Asian nations (UAE, Qatar, Saudi Arabia, Kuwait) are the largest suppliers of LPG, and they are transited through the Strait of Hormuz. Any disturbance of this maritime chokepoint is an immediate threat to the household fuel security of India.
- Household-Centric Rigid Demand: In contrast to other countries that use LPG in industry, more than 85-90 percent of India LPG consumption is cooking. This means that the supply of a particular product to households is crucial and cannot be easily postponed as compared to industrial consumption and hence supply disruptions are socially and politically sensitive.
- Unimportant Strategic Storage: The underground cavern storage is only 1.4 lakh tonnes (in Visakhapatnam and Mangaluru) or less than two days of the national consumption.
The 2026 Crisis: A Wake-Up Call
The 2026 regional tension in the Strait of Hormuz proved that the just-in-time supply chain is weak.
- Supply Crunch: There were shortages due to the threatened shipping lanes.
- Priorization: Leading to the limitation of commercial supply by making households a priority of Government-forced Oil Marketing Companies (OMCs).
- Economic Impact: The high level of imports implies that global price shocks quickly escalate subsidy bills and inflationary pressures.
Way Forward: Enhancing Resilience
- Transition to PNG: The transition to using Piped Natural Gas (PNG) instead of LPG cylinders would help decrease reliance on imported, bottled LPG.
- Import Diversification: Diversifying the source of Imports to avoid the Strait of Hormuz.
- Increasing Strategic Reserves: To increase buffer stock, additional underground storage should be constructed.
- Laying Claim to Domestic Molecules: Making sure that domestically produced LPG is first used in the domestic kitchen and not in petrochemical use.
Source: The Hindu
.png)
