Indian Government Normalises Supply of Non-Domestic LPG to Pre-Crisis Levels Following Disruptions in West Asia

Key Points

1. The Indian government lifted all restrictions on the Non-Domestic Packed LPG sector on June 25, 2026, and increased bulk LPG supply to 50% of the pre-crisis level for commercial and industrial purposes.
    
2. In March 2026, following the West Asia crisis, the Indian government used its emergency powers to prioritise household LPG consumption and increase LPG production by refineries.

Why Did India Restore LPG Supplies to Industries on June 25, 2026?

India increased LPG supplies to non-household users and removed caps on commercial sector allocations after improved availability, the government said in a statement on June 25, 2026. The government said, “The restoration follows the recent improvement in the LPG supply situation.” India restored 50% LPG supplies to commercial and industrial customers whose allocation had been suspended. The country also decided to increase supplies of propane, butane, and other molecules for petrochemical production.

Before the conflict, India bought 90% of its LPG imports from Middle Eastern producers. Those supplies were hit after the Strait of Hormuz closure, forcing India to diversify purchases and raise imports from the US. India’s LPG imports from the US are set to top 1 million metric tons in June 2026, a record high. The government also confirmed domestic production will continue at no less than 45,000 metric tons daily.

How will the LPG supply normalise and bring ease for small business units and industrial customers all over India? 

This LPG supply restoration will come as an immediate relief for small units like hotels, restaurants, eating joints, etc., relying on commercial LPG cylinders, which had seen supply cuts over the last several months. The government had exercised its force majeure clause in March 2026. The priority supply for households was on account of the crisis, which meant a crunch for the commercial and industrial end-users of the fuel. Petrochemical manufacturers have also been asked to reroute their feedstock to refiners to optimise domestic production of LPG.

Small commercial users facing cash flow strain during the curtailment period often need working capital support to manage cylinder costs and operational gaps. According to LoansJagat, the Pradhan Mantri MUDRA Yojana scheme has disbursed more than ₹23 lakh crore through almost 41 crore loans since April 2015, out of which 68% have been made to female entrepreneurs who own small eateries and home-based food shops relying on LPG as fuel. Now that supplies have reached their pre-crisis level, they can operate without any interruptions related to fuel.

What’s the government’s plan for LPG Supply Moving Ahead? 

The Ministry of Petroleum and Natural Gas had announced it has ordered the oil marketing companies to keep up with full data of all their commercial and industrial LPG consumers in order to facilitate planning. A unified sectoral database will now be maintained across OMCs to strengthen monitoring and operational coordination. With indigenous production improving and import cargoes stabilising, the government decided to reduce the diversion of C3-C4 streams into the LPG pool, freeing up more supply for non-LPG industries.

The government’s longer-term solution involves expanding Piped Natural Gas connectivity. Commercial and bulk consumers who have already shifted to PNG will continue on it, while other eligible LPG consumers will be progressively transitioned to PNG in coordination with City Gas Distribution entities. The Petroleum Ministry Secretary has written to all state Chief Secretaries to ensure smooth implementation of these revised supply arrangements.

Conclusion

India's June 25, 2026 decision to restore LPG supplies marks a clear sign that the West Asia-driven energy disruption is easing. With bulk supplies back at 50% and record US imports filling the gap, industrial and commercial consumers can expect steadier fuel access through the rest of FY27.

FAQs

Has India fully restored LPG supplies to hotels, restaurants, and factories after the Iran crisis disruptions?

Yes. On June 25, 2026, the government removed all sectoral restrictions on non-domestic packed LPG and restored supplies to pre-West Asia crisis levels. Bulk LPG supply, which had been fully suspended, has also been partially revived at 50% of pre-crisis consumption levels.

What is non-domestic LPG, and why can its lack make small businesses bleed and food prices rise steeply?

Non-domestic LPG is commercial cylinder meant for Hotels, restaurants, caterers and for small scale industries unlike household gas. The supply shortage force industries to shift to costlier alternate fuel in turn making them increase food and other charges. For want of supply, the government had last week invoke Essential Commodities Act to give precedence to household LPG consumption over and above the industrial and commercial demand for the same.