The Indian government is promoting a shift from liquefied petroleum gas (LPG) cylinders to piped natural gas (PNG) to decrease reliance on imported cooking fuel. This initiative aims to mitigate the impact of international conflicts that disrupt fuel supplies and elevate import costs. To facilitate this transition, the government has introduced financial incentives for city gas distribution companies, encouraging them to connect more households to PNG services.

Starting in September, these distributors will receive an additional 200 standard cubic metres of domestically produced gas for every household they connect to PNG that begins to actively use and pay for the service. The goal is to activate existing but underutilised PNG connections and expand pipeline networks to reach a broader customer base, thereby lowering sourcing costs for distributors.

This government approach is designed to make new PNG connections more financially viable, encouraging distributors to enhance their operations and bring in new customers swiftly.

Rationale Behind Promoting PNG

The significance of this initiative is underlined by India’s substantial reliance on LPG imports, which currently account for approximately 60 per cent of the country’s total LPG demand. In 2025, India imported around 22 million metric tonnes of LPG at a cost of nearly $12 billion, predominantly sourced from the Middle East. Consequently, any disruption in supply routes or an increase in international prices could lead to an escalation in the country’s fuel import expenditure, which poses challenges for domestic consumers.

The ongoing geopolitical tensions in the Middle East have intensified this dependency, prompting the government to explore alternatives that bolster domestic gas utilisation and lessen the economic burden associated with LPG imports. With this focus, the transition to PNG is now regarded as a strategic priority.

Despite the emphasis on transitioning to PNG, LPG remains the predominant cooking fuel in Indian homes. As of July 1, there were around 331.4 million active household LPG customers compared to only 17.4 million domestic PNG connections. This disparity highlights the ambitious nature of the government’s plans to broaden PNG adoption.

Impact on Households and Distributors

The potential benefits of PNG for consumers include a continuous gas supply and elimination of the need for ordering and storing LPG cylinders. However, the availability of PNG is contingent on existing pipeline networks reaching various residential areas. The government’s recent measures aim to bridge this gap by motivating city gas distributors to enhance network connectivity and optimise existing infrastructure.

In terms of infrastructure investments, expanding PNG networks calls for significant financial outlays from distributors. The government asserts that the newly introduced supply of cheaper domestic gas could allow these companies to recoup their investments within a three-year timeframe, a marked improvement compared to the approximately ten years needed previously.

This financial incentive is expected to hasten the expansion of network coverage and effectively convert dormant connections into active customers. Over the past weeks, various companies, including Indraprastha Gas, Mahanagar Gas, GAIL Gas, and Bharat Petroleum Corporation, have also initiated their own promotional strategies, such as reduced installation fees, to encourage households to transition to PNG.

Ultimately, while the government does not intend to eliminate LPG usage overnight, it aims to utilise these incentives to motivate households to adopt piped gas options wherever available, thereby easing India’s dependence on imported LPG in the long term.

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