The Indian government is seeking to ease pressure from surging import costs of liquefied petroleum gas (LPG) by speeding up household piped natural gas (PNG) connections. As the Iran conflict disrupts Middle East supplies, India’s LPG imports from the PeRSIan Gulf have been significantly hampered. The government has approved an incentive scheme to promote domestic PNG connections, encouraging city gas distributors to expand pipeline network coverage.

Disrupted Middle East Supplies Push Up Costs

As one of the world’s most populous nations, India has long relied on LPG as a key household cooking fuel and one of its major imported energy commodities. Around 60% of Indian households use LPG as their primary cooking fuel. Before the conflict broke out, roughly 90% of India’s LPG imports travelled through the Strait of Hormuz. With this route now disrupted, consumers are already facing tighter supply and higher procurement costs.

Reduced supplies from PeRSIan Gulf producers have forced India to source LPG from alternative suppliers at a higher cost. By pushing PNG as an alternative, the government aims to cut reliance on imported LPG via more stable, lower-cost domestic piped gas supply.

Incentive Scheme Takes Effect in September

The government-approved “Incentive Scheme for Promotion of Domestic PNG Connections” will come into force on September 1, 2026. It aims to accelerate the expansion of active PNG connections so more households can switch to piped natural gas for cooking at an earlier date. The scheme is viewed as a major initiative to deliver cleaner, safer and more affordable cooking gas to residents nationwide.

Under the policy, eligible city gas distributors (CGD) will receive an additional quota of 200 standard cubic metres of cheap domestic natural gas for every new domestic PNG connection added. India plans to implement the scheme in two phases spanning six months in total.

Potential Cost Reduction for City Gas Operators

The Indian government stated that the additional gas allocation will replace the more expensive liquefied natural gas (LNG) currently purchased by city gas distributors for compressed natural gas (transport) operations, lowering their overall gas sourcing costs. For gas firms, this means they can improve their gas supply mix and procurement efficiency while expanding residential piped connections.

From a market perspective, the policy shows India accelerating domestic pipeline and end-user connection construction amid external energy supply disruptions to strengthen energy resilience. If PNG connection expansion moves ahead smoothly, household cooking fuel mix in India may shift further toward piped natural gas, potentially eASIng LPG import pressure for a period.

Policy Targets Both Livelihoods and Energy Security

The core goal of the incentive scheme extends beyond subsidising gas companies. It uses policy guidance to shift more households away from high-cost imported fuels toward domestic piped gas supply. For a market such as India, which relies heavily on imported LPG, disruptions to shipping via the Strait of Hormuz have simultaneously exposed challenges around energy security and household living costs.

Against a backdrop of Middle East tensions reshaping global energy flows, India’s move demonstrates an attempt to reduce dependence on a single import route through infrastructure expansion and fuel substitution. The rollout pace of the scheme and connection progress by city gas distributors will serve as key indicators for improvements in household gas supply across India.