India Orders 70% LPG Allocation for Key Industries Linked to Gas Reforms, Issues Urgent State Orders
In a follow-up to March correspondence, the Centre on Wednesday released a formal allocation framework for packed non-domestic LPG to protect high-priority sectors. Under the new Petroleum and Natural Gas Distribution Order 2026, states have been allotted 70% of their required LPG volumes, with an additional 10% incentive linked to progress in PNG reforms.
The Ministry of Petroleum and Natural Gas has instructed state governments to prioritize industrial units where LPG is integral to the manufacturing process and cannot be replaced by natural gas. Sectors such as pharmaceuticals, polymers, and agriculture are identified as the primary beneficiaries of this protected status.
Eligible units will receive 70% of their average consumption recorded prior to March 2026. However, this is contingent on mandatory compliance: units must be registered with Oil Marketing Companies (OMCs) and have a pending or active application for PNG infrastructure.
Reform Linked Incentives
To accelerate India’s transition to a gas-based economy, the Centre is using the crisis to push for infrastructure reforms. States that meet specific PNG reform targets can access an additional 10% LPG allocation.
"States are urged to implement the 2026 Distribution Order without delay," the Centre’s letter stated. This move aims to force industries capable of using natural gas to switch, thereby freeing up limited LPG supplies for sectors with no other technical alternative.
Push For Compressed Biogas
Amid the supply volatility, the government is also fast-tracking the Compressed Biogas (CBG) policy. While the draft policy was shared in early April 2026, the Centre has now asked states to notify their respective policies immediately to provide a long-term alternative to fossil-fuel-based LPG.
Published By : Shourya Jha
Published On: 8 April 2026 at 13:45 IST