Energy Security / Centre Unveils New LPG Allocation Formula to Safeguard Key Industries
·1 hour ago·3 min read
Key Points
The Centre has introduced a new LPG allocation formula to safeguard critical industries amid Middle East tensions. The revised policy ensures up to 70% supply for sectors like pharmaceuticals, food processing, agriculture, polymers, and steel, with priority given to units where LPG cannot be substituted. States will also benefit from reform-linked allocations, while demand for smaller LPG cylinders continues to surge nationwide.
New Delhi, April 8: In response to rising tensions in the Middle East and their potential impact on energy supplies, the Indian government has introduced a new formula for LPG allocation to support critical industries. The Ministry of Petroleum and Natural Gas announced that the revised policy will ensure a steady bulk LPG supply to essential sectors such as pharmaceuticals, food processing, agriculture, polymers, packaging, paints, steel, ceramics, glass, and aerosols.
These industries are considered vital for maintaining economic stability and supply chains across the country. Under the new formula, eligible industries will receive up to 70 percent of their LPG consumption levels recorded before March 2026. However, the overall allocation has been capped at 0.2 thousand metric tonnes per day for the entire sector.
The government clarified that priority will be given to factories where LPG cannot be substituted with natural gas. Such units will be supplied first to ensure uninterrupted production. At the same time, industries are required to register with oil marketing companies and apply for piped natural gas (PNG) connections through city gas distribution firms. This requirement, however, has been relaxed for units where LPG is an essential part of the manufacturing process and cannot be replaced.
Also Read: Centre Doubles Daily Allocation Of 5 kg Free Trade LPG Cylinders For Migrant Labourers
Additionally, the Centre has already allocated 70 percent of packaged non-domestic LPG to states. An extra 10 per cent allocation will be provided to states that implement reforms related to PNG adoption. To qualify, states must circulate the Natural Gas and Petroleum Products Distribution Order 2026 among departments, utilize reform-linked LPG allocation benefits promptly, and notify policies related to compressed biogas.
The ministry also reported a sharp rise in demand for smaller LPG cylinders. Since March 23, approximately 7.8 lakh 5-kg free trade LPG cylinders have been sold nationwide. On a single day earlier this week, sales crossed 1.06 lakh cylinders, compared to an average of about 77,000 per day in February.
Officials emphasized that the new allocation formula is designed to balance industrial demand with energy security, ensuring that critical sectors continue to function smoothly despite global uncertainties. The move highlights the government’s proactive approach to safeguarding India’s economy amid geopolitical challenges.
These industries are considered vital for maintaining economic stability and supply chains across the country. Under the new formula, eligible industries will receive up to 70 percent of their LPG consumption levels recorded before March 2026. However, the overall allocation has been capped at 0.2 thousand metric tonnes per day for the entire sector.
The government clarified that priority will be given to factories where LPG cannot be substituted with natural gas. Such units will be supplied first to ensure uninterrupted production. At the same time, industries are required to register with oil marketing companies and apply for piped natural gas (PNG) connections through city gas distribution firms. This requirement, however, has been relaxed for units where LPG is an essential part of the manufacturing process and cannot be replaced.
Also Read: Centre Doubles Daily Allocation Of 5 kg Free Trade LPG Cylinders For Migrant Labourers
Additionally, the Centre has already allocated 70 percent of packaged non-domestic LPG to states. An extra 10 per cent allocation will be provided to states that implement reforms related to PNG adoption. To qualify, states must circulate the Natural Gas and Petroleum Products Distribution Order 2026 among departments, utilize reform-linked LPG allocation benefits promptly, and notify policies related to compressed biogas.
The ministry also reported a sharp rise in demand for smaller LPG cylinders. Since March 23, approximately 7.8 lakh 5-kg free trade LPG cylinders have been sold nationwide. On a single day earlier this week, sales crossed 1.06 lakh cylinders, compared to an average of about 77,000 per day in February.
Officials emphasized that the new allocation formula is designed to balance industrial demand with energy security, ensuring that critical sectors continue to function smoothly despite global uncertainties. The move highlights the government’s proactive approach to safeguarding India’s economy amid geopolitical challenges.
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