India's LPG Import Dependency: Energy Security and Policy Challenges

Indian Express - Explained · 16 Mar 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India's LPG imports have surged to 60% of total consumption, driven by rising demand and stagnant domestic production, exposing vulnerabilities in energy security amid geopolitical tensions in West Asia.

Key points

LPG import dependency has risen from 7.2% of petroleum imports in 1998-99 to 40% in 2024-25, making it India's largest imported petroleum product by volume, with expenditure growing 83-fold to Rs 1.06 lakh crore.

Strait of Hormuz serves as the transit route for 90% of India's LPG imports, creating strategic vulnerability given ongoing West Asia conflicts that threaten this critical chokepoint for global energy flows.

Pradhan Mantri Ujjwala Yojana (PMUY) significantly boosted LPG adoption, with 10.56 crore connections provided to rural households, contributing to a 10.1% consumption spike in 2016-17 and altering traditional fuel use patterns.

Domestic production stagnation has persisted since 2017-18 at under 13,000 TMT annually, despite refining capacity expansions, creating a 16,885 TMT deficit against 29,664 TMT consumption in 2023-24.

[GS3-Economy] The fiscal impact is substantial, with LPG now accounting for 53% of petroleum import expenditure, creating macroeconomic vulnerabilities given rupee depreciation risks and global price volatility.

Consumption patterns show a five-fold growth since 1998-99, driven by urbanization, middle-class expansion, and subsidy schemes, though growth has slowed to 4.1% in 2023-24 as market saturation approaches.

Policy responses include a 25% domestic production boost mandate and extended cylinder booking intervals (25 days urban/45 days rural), alongside promoting alternative fuels like kerosene and biomass for commercial users.

[GS2-Governance] The Petroleum Planning and Analysis Cell (PPAC) data reveals systemic failure in aligning production with demand, highlighting gaps in long-term energy planning despite India becoming a net exporter of other petroleum products.

Way Forward: India should accelerate diversification of import routes beyond Hormuz, invest in bio-LPG production from agricultural waste, and implement targeted demand-side measures like efficient stoves to optimize existing LPG use while expanding strategic reserves.

Key terms

Strait of Hormuz

A critical maritime chokepoint between Oman and Iran, through which 21 million barrels of oil pass daily (30% of global seaborne trade). Its geopolitical significance for India stems from 90% of LPG imports transiting this route, making energy security vulnerable to regional conflicts and piracy risks.

Pradhan Mantri Ujjwala Yojana (PMUY)

A flagship scheme launched in 2016 to provide free LPG connections to women below poverty line, aiming to replace unclean cooking fuels. By 2024, it covered 10.56 crore households, transforming rural energy consumption but also contributing to import dependency by rapidly expanding the LPG consumer base without commensurate production growth.

Petroleum Planning and Analysis Cell (PPAC)

A technical body under the Ministry of Petroleum and Natural Gas that collects and analyzes data on petroleum products. Its reports provide critical inputs for energy policy formulation, revealing structural trends like India's transition from net exporter to importer of LPG since 1999.

Energy Security

A nation's ability to ensure affordable, reliable energy supplies while mitigating geopolitical and market risks. For India, LPG import dependence exemplifies the 'energy trilemma' of balancing affordability, sustainability, and security, requiring integrated policies across production, distribution, and consumption sectors.