India’s appetite for liquefied petroleum gas (LPG) has witnessed a dramatic surge over the past eight years, with total consumption rising 44 per cent to 31.3 million metric tons (MMT) in fiscal 2025 from 21.6 MMT in fiscal 2017. Analysts expect demand to continue its upward trajectory, reaching 33 to 34 MMT in fiscal 2026, driven by increasing household adoption, improved affordability through government subsidies, and the steady expansion of delivery infrastructure across rural and urban regions.

The government’s flagship Pradhan Mantri Ujjwala Yojana (PMUY) has been pivotal in this transformation, extending LPG access to millions of low-income households. Average refill rates for PMUY beneficiaries have grown to 4.5 cylinders per household per year in fiscal 2025, compared to 3.9 in fiscal 2017. This growth reflects both the deepening penetration of clean cooking fuel and rising dependence on LPG as the primary energy source for daily use. Non-Ujjwala households have consistently averaged between six and seven refills annually, suggesting that LPG has now become indispensable for India’s energy security at the domestic level.

The Crisil Ratings report also highlights the expansion of LPG usage beyond the household sector. The share of LPG consumed by commercial and industrial segments has increased from 10 per cent in fiscal 2017 to 16 per cent in fiscal 2025. This growth is attributed to its growing role in food service chains, institutional kitchens, and small manufacturing units. Broader utilization across industries has not only diversified the demand base but also reduced the seasonal dependency historically seen in residential consumption.

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Despite a moderate rise in domestic LPG production—from 11.2 MMT in 2017 to 12.8 MMT in 2025—local supply continues to lag behind surging demand. India’s ongoing reliance on overseas imports remains significant, with 55 to 60 per cent of national LPG needs still sourced from foreign producers. The gap underscores the country’s growing vulnerability to global price fluctuations and freight costs, despite sustained investment in refining and gas processing capacities.

To address this imbalance, India recently entered into a long-term LPG import agreement with the United States, covering an estimated 2.2 million tonnes per year. The deal marks a notable departure from the country’s historical dependence on Middle Eastern suppliers and is expected to enhance supply stability through diversification. However, analysts caution that import cost sensitivity and logistics expenses may continue to influence margins for oil marketing companies. As demand continues to rise in both domestic and industrial sectors, balancing affordability with energy independence will remain a crucial policy challenge for India’s energy planners.

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