What is the LPG shortage and when did it begin in 2026?
India is currently grappling with a protracted commercial LPG shortage, precipitated by intensifying Middle East volatility and the subsequent destabilisation of global energy corridors. In an order notified by the Ministry of Petroleum and Natural Gas on 09 March 2026, the central government issued the Natural Gas (Supply Regulation) Order, invoking powers under the Essential Commodities Act, 1955 to regulate the production, supply and distribution of natural gas in the country following disruptions in global supplies caused by ongoing escalations in the Middle East. This was required to regulate and ensure equitable distribution of natural gas for critical sectors like household consumption and transport. Domestic piped natural gas (PNG), CNG and LPG are being prioritised. Additionally, oil refineries across India have increased production by 10 percent and are now operating at full capacity, while a three-member central committee has been set up to review LPG supply and coordinate distribution for commercial users.
Why is there an LPG shortage in India?
India depends heavily on Middle Eastern energy sources, with about 60 percent of its LPG consumption imported and about 90 percent coming through the Strait of Hormuz, which is now affected by ongoing tensions. Unlike oil, where India maintains strategic reserves, LPG supply is more dependent on continuous import flows with limited buffer capacity. The escalating conflict involving the United States, Iran and Israel has created significant instability, causing shipping delays, increased insurance costs and rerouting of tankers away from conflict zones, extending transit times and reducing effective supply reaching Indian ports. Oil marketing companies (Indian Oil, Bharat Petroleum and HPCL) have prioritised household LPG consumers over commercial users, creating acute shortages for commercial establishments. Crude oil prices have surged due to geopolitical tensions, directly impacting LPG costs, while the government has increased the lock-in period for commercial LPG cylinders from 21 days to 25 days, further constraining commercial sector access.
Which regions in India are most affected?
Commercial LPG shortages are affecting hotels and restaurants across multiple states. In Maharashtra, around 20 percent of hotels and restaurants in Mumbai have already shut down, with up to 50 percent potentially suspending operations within 48 hours. In Karnataka, restaurants in Bengaluru face severe shortages, with vendors denying fresh supplies and stocks lasting only until mid-March; the Bangalore Hotels Association announced a citywide shutdown from 10 March 2026. In Tamil Nadu, restaurants in Chennai and Coimbatore have reduced menus, limited operating hours or temporarily closed, with major chains like Adyar Ananda Bhavan facing cylinder shortages. In West Bengal, Kolkata restaurants and bakeries are facing shortages, with commercial cylinders at INR 2,300 and halted deliveries. In Telangana, industry representatives warned that nearly 90 percent of hotels in Hyderabad could shut within 48 hours. In Delhi-NCR, the National Restaurant Association of India warned many restaurants and cloud kitchens have only two to three days of commercial LPG stock left, with black market cylinders selling at INR 4,200–5,000. In Punjab, urea production at NFL plants in Nangal and Bathinda has halted after GAIL reduced LNG supply by up to 40 percent. Disruptions are also reported in Puducherry, Kerala, Jharkhand, Odisha, Rajasthan and Madhya Pradesh.
What is the impact on transport and CNG?
Amid CNG shortage, local public transport has reported disruptions across metropolitan cities. Private cab aggregators like Uber and Ola are expected to face hiked prices and higher waiting times if the CNG shortage continues. Anticipated impacts include reduced fleet availability, long queues at gas stations, operational delays for drivers and commuters, potential surge pricing with fares increasing by 1.5x to 2x usual rates in tier-one cities, and dual-fuel challenges where the higher cost of petrol compared to CNG may lead to higher passenger fares. Auto rickshaw drivers in Kolkata report wait times increasing from 05 to 45 minutes at key stations.
What are the business continuity risks?
The hospitality sector faces an immediate existential threat, with widespread closures causing daily revenue losses estimated between INR 1,200–1,300 crore. Beyond food service, the petrochemical industry has been impacted by statutory bans on using propane and butane as feedstock. The transport sector is experiencing friction as CNG queues and refuelling delays decrease vehicle uptime. Essential service providers, including private crematoriums, are struggling to maintain operations. The invocation of emergency powers has triggered widespread force majeure declarations, complicating contract enforcement and increasing legal liabilities. Inventory levels for industrial users have been reduced to 80 percent of typical consumption. Logistics costs are escalating due to rerouting of tankers, resulting in congestion surcharges that compress operating margins. The private sector is absorbing a sustained seven to 15 percent increase in energy costs, exerting substantial pressure on EBITDA. SMEs in hospitality and manufacturing clusters face heightened credit risks as cash flow dries up.
What should organisations and individuals do to prepare?
Organisations should implement an immediate energy audit to transition non-critical thermal processes to electric or biomass alternatives. Legal teams should conduct a thorough review of all supply agreements, specifically focusing on “Hardship” and Force Majeure triggers to mitigate liability. Proactive supply chain management is essential; firms should explore direct petitions for “Essential Service” status if they provide critical infrastructure. Businesses must adopt transparent communication strategies with both employees and stakeholders to manage expectations, minimise workforce turnover and maintain operational stability. Remote work and hybrid policies can reduce daily commuting and lower aggregate demand for fuel and CNG. Financial institutions and lenders should exercise caution, reflecting earnings uncertainty and the long-term potential for debt-service defaults if supply constraints persist beyond the 45-day threshold. Individuals should monitor official advisories, consider alternative cooking methods such as induction stoves, and prepare for potential price escalations in prepared meals and logistics fees.
Frequently asked questions
When did the LPG shortage begin in India?
The commercial LPG shortage intensified in early March 2026, with the central government issuing the Natural Gas (Supply Regulation) Order on 09 March 2026 and the Bangalore Hotels Association announcing a citywide shutdown from 10 March 2026.
Which cities are most affected by the LPG shortage?
Major cities affected include Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata, Lucknow, Bhopal, Mysuru, Delhi-NCR, Chandigarh, Gurugram, Noida and Jaipur, with supply reductions of at least 50 percent reported in some regions.
What are the emergency contact numbers for India?
Nationwide: All-in-One Emergency (ERSS) 112, Police 100, Ambulance 108, Fire 101, Women’s Helpline 1091.
Download the full advisory now
datasurfr’s Special Advisory on the LPG Shortage in India Amid Gulf Escalations carries the complete state-by-state impact data, the full regulatory guidelines, and a detailed contacts directory. Download the full advisory now to brief your travel and continuity teams.
Filed under: India-South AsiaThreat Intelligence Special Reports
