Oil ministry sets up panel as commercial LPG shortage hits hospitality sector
New Delhi (PTI): The oil ministry has constituted a committee to examine supply issues after a sudden shortage of commercial LPG cylinders alarmed the hospitality sector, with restaurant associations warning that eateries could shut down within days if supplies are not restored.
As the widening conflict in the Middle East disrupted fuel lifelines, including India's LPG supplies, the government has prioritised domestic cooking gas supplies to households. This has led to supply crunch for hotels and restaurants which use market priced commercial LPG.
"For LPG supply to other non-domestic sectors, a committee of three Executive Directors (EDs) of Oil Marketing Companies (OMCs) have been constituted to review the representations for LPG supply to restaurants/hotels/other industries," the ministry said in a post on X.
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India consumed some 31.3 million tonnes of LPG annually. As much as 87 per cent of this is in the domestic sector i.e. household kitchens, and the rest in commercial establishments such as hotels and restaurants.
Of this total requirement, as much as 62 per cent is met through imports. The US and Israel attack on Iran and Tehran's retaliation has shut the Strait of Hormuz - the conduit through which India got 85-90 per cent of its LPG imports from countries like Saudi Arabia.
As alternate sources are being scouted, the limited supplies available meant the government prioritising supplies to the domestic sector, and in process the commercial establishments have suffered.
Industry sources say the disruption has already begun affecting operations in Mumbai and Bengaluru, as hotels and restaurants struggle to secure cooking gas.
Vijay Shetty, president of the India Hotels and Restaurant Association, said the shortage is spreading rapidly and could soon paralyse the sector.
While maintaining that the country has adequate fuel stocks, the ministry in recent days directed refineries to maximise LPG output by curtailing petrochemical streams and extended the LPG refill booking cycle to 25 days from 21 days.
"In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, the ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use," the ministry said in the post on X.
"The ministry has prioritised domestic LPG supply to households and introduced a 25 day inter-booking period to avoid hoarding/black marketing."
Non domestic supplies from imported LPG are being prioritised to essential non domestic sectors such as hospitals and educational institutions, it said.
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When Gas Ships Slow, India’s Kitchens Feel the Heat
A war happening thousands of kilometres away can quietly reach our kitchens. The ongoing conflict in West Asia, particularly involving Iran, Israel and the United States, has begun disturbing global energy supply routes. One important fuel affected by this disruption is LPG — the cooking gas used in millions of Indian homes. When supply chains shake in that region, countries like India immediately feel the pressure.
India is the world’s second-largest importer of LPG. Last year, the country used about 33.15 million metric tonnes of cooking gas. But India does not produce enough LPG domestically to meet all its needs. Local production stands at around 12.8 million metric tonnes, which means less than half of the country’s demand is produced within India. The remaining requirement is filled through imports.
This heavy dependence on imports makes India sensitive to global disruptions. More than 50% of India’s LPG requirement comes from other countries, and about 80% of these imports arrive from Gulf nations such as Saudi Arabia, Qatar and the United Arab Emirates. Most of these ships travel through the Strait of Hormuz, a narrow sea route that acts like a busy highway for global energy supplies. Because of the ongoing conflict in West Asia, ship movements in this region have slowed sharply, affecting LPG shipments to India.
To understand the scale of LPG usage, consider the daily consumption numbers. India uses roughly 6.4 million LPG cylinders every day, based on annual consumption figures. Cities with large populations naturally consume large amounts. Bengaluru, for example, with an estimated 13 million residents, likely needs around 55,000 to 60,000 domestic LPG cylinders daily for households and small businesses.
The shortage has already begun affecting the market. According to officials, weekly LPG inflows into the country have dropped by nearly 30%. To manage the situation and prevent misuse, oil companies have tightened refill rules. Consumers can now book a new domestic cylinder only after 25 days from the previous delivery, compared to the earlier waiting period of 21 days. Delivery agents have also started using OTP or biometric verification to stop hoarding and illegal diversion of cylinders.
Restaurants and small eateries are facing an even tougher situation. Bengaluru alone has around 40,000 hotels and restaurants, while Karnataka has nearly one lakh such establishments. Many of the city’s popular darshinis — small eateries that are a vital part of Bengaluru’s food culture — operate in compact spaces. Because of limited storage capacity, these establishments usually keep only one or two days’ LPG reserve. They also consume three to four commercial cylinders every day, making them particularly vulnerable when supply slows.
Commercial cylinders are different from the domestic ones used in homes. Commercial LPG cylinders are usually blue and weigh between 19 and 47.5 kilograms, designed for continuous use in businesses like hotels and restaurants. Domestic cylinders are red and contain 14.2 kilograms of gas, meant for household cooking. Commercial cylinders are more expensive and do not receive government subsidies.
Prices have also moved upward. Last week, domestic LPG cylinder prices increased by ₹60, while commercial cylinders became costlier by ₹115. Rising global energy prices and supply disruptions caused by the conflict are the main reasons behind this increase.
To protect household supply, the Union Petroleum Ministry directed Oil Marketing Companies (OMCs) to prioritise LPG cylinders for domestic consumers instead of commercial users. The ministry also ordered oil refineries and petrochemical plants to divert propane and butane gases primarily for LPG production rather than using them to manufacture other petrochemical products such as plastics and industrial chemicals.
India still maintains a safety buffer. The country currently holds LPG stocks sufficient for about 25 to 30 days of national consumption, which helps manage temporary disruptions. Officials say the current supply position remains comfortable for the next two to three weeks, though careful management is required.
At the same time, India is actively searching for new suppliers. With shipments from the Gulf affected, the government has begun talks with countries such as Australia, Norway and Algeria to secure additional LPG supplies. Diversifying imports helps reduce dependence on a single region during times of geopolitical tension.
India has also signed new long-term agreements to strengthen supply security. New Delhi recently finalised contracts to import around 2.2 million tonnes of LPG every year from the United States, which accounts for nearly 10% of India’s annual LPG imports. Deliveries under these agreements started in January 2026, providing an additional cushion for the country’s energy needs.
The current situation is a reminder of how closely India’s daily life is connected to global events. A conflict far away can influence shipping routes, energy markets and fuel supplies. When those changes ripple through supply chains, they eventually reach the place where they matter most — the flame under a household kitchen vessel.
(Girish Linganna is an award-winning science communicator and a Defence, Aerospace & Geopolitical Analyst. He is the Managing Director of ADD Engineering Components India Pvt. Ltd., a subsidiary of ADD Engineering GmbH, Germany.)
Disclaimer: The views and opinions expressed in this article are solely those of the author. They do not necessarily reflect the views, policies, or position of the publication, its editors, or its management. The publication is not responsible for the accuracy of any information, statements, or opinions presented in this piece.
