The government has announced a significant industrial LPG allocation hike, increasing the supply of liquefied petroleum gas to 70% for several critical manufacturing sectors. The move is designed to support industrial units in pharmaceuticals, food processing, and agriculture, among others, by easing access to essential fuel inputs.
According to a communication from the Ministry of Petroleum and Natural Gas (MoPNG), this increased allocation is subject to a sectoral cap of 200 tonnes per day. The policy aims to balance the immediate energy needs of high-priority industries with the government’s broader goal of transitioning commercial users toward more sustainable energy alternatives.
The directive, detailed in a letter to states by MoPNG Secretary Neeraj Mittal, specifies that eligible units will receive 70% of their bulk non-domestic LPG consumption levels as recorded prior to March 2026. This targeted relief extends to a wide array of sectors, including polymers, packaging, paints, steel, ceramics, and aerosols, as well as specialized fields such as uranium and heavy water production.
Conditions for Eligibility and the Shift to PNG
To access the additional LPG allocation, industrial units must first register with state-run oil-marketing companies. However, the government is using this allocation as a lever to accelerate the adoption of Piped Natural Gas (PNG). Most commercial users will now be required to apply for PNG connections through their respective city gas distribution companies and demonstrate active steps toward adopting the piped infrastructure.
Recognizing that not all industrial processes are compatible with natural gas, the ministry has included a critical exemption. The requirement to apply for PNG will be waived for industries that use LPG as an integral input in their manufacturing process or for specialized purposes where natural gas cannot serve as a substitute.
This dual-track approach reflects a strategic effort to maintain industrial productivity while reducing reliance on cylinder-based LPG distribution, which is often more logistically intensive than piped alternatives.
Broadening Energy Relief for Fertilizers and Petrochemicals
The LPG adjustments are part of a wider energy security strategy discussed during a recent government briefing on the West Asia crisis. Beyond LPG, the government has increased the overall natural gas allocation for fertilizer plants by 5%. This brings the supply to approximately 95% of the units’ average consumption over the previous six months, a move intended to safeguard domestic food security by stabilizing fertilizer production.
The petrochemical sector has also received a boost. In a move to support production, the government has authorized the diversion of 800 million tonnes (mt) per day of propane and butane for petrochemical use, according to the MoPNG communication. While this figure represents a substantial volume of feedstock, it underscores the government’s intent to prevent supply-chain disruptions in the chemicals sector.
Summary of Energy Allocation Adjustments
| Sector | Energy Source | Adjustment/Allocation |
|---|---|---|
| Pharma, Food, Agri, etc. | LPG | Increased to 70% (Capped at 200t/day) |
| Fertilizer Plants | Natural Gas | Increased by 5% (to ~95% of 6-month avg) |
| Petrochemicals | Propane/Butane | 800 mt per day diverted for production |
| General Industry | Coal | 20% reduction in e-auction reserve price |
Coal Affordability and Auction Trends
Parallel to the gas and LPG measures, the government is addressing coal affordability to lower overhead costs for power and industrial users. Coal India (CIL) has reduced the reserve price of coal by 20% under its e-auction mechanism. This price reduction is coupled with an increase in supply through both e-auctions and state-nominated agency channels.
Recent data from Coal India indicates a high volume of activity in the e-auction market. In March 2026, CIL offered 32.53 mt of coal, with 13.32 mt successfully booked. The momentum is expected to continue into April 2026, with 30 e-auctions planned to offer a total of 25.8 mt. As of the latest update, 3.2 mt has been offered, and 1.24 mt has already been booked.
These combined measures—spanning LPG, natural gas, and coal—suggest a coordinated effort by the Ministry of Petroleum and Natural Gas and other agencies to insulate the industrial sector from global energy volatility and regional crises.
The next phase of these implementations will likely involve the verification of registrations with oil-marketing companies and the assessment of PNG compatibility for the affected industrial units. Further updates on auction results and allocation quotas are expected in the coming monthly review cycles.
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