New Delhi: The Indian government introduced a revised LPG allocation formula on Wednesday to maintain uninterrupted supplies to essential industries amid escalating tensions in the Middle East. According to the Ministry of Petroleum and Natural Gas, the new policy targets key sectors including pharmaceuticals, food processing, agriculture, polymers, steel, packaging, paints, ceramics, glass, and aerosols, which are vital for economic stability and supply chains.
Under the revised formula, these industries will receive up to 70 per cent of their pre-March 2026 LPG consumption levels. However, the overall daily allocation for the sector has been capped at 0.2 thousand metric tonnes. Priority will be given to units where LPG cannot be substituted with natural gas, ensuring they receive supplies first to prevent production disruptions.
The government has directed industries to register with oil marketing companies and apply for piped natural gas (PNG) connections through city gas distribution entities. This requirement is relaxed for manufacturing units where LPG forms an irreplaceable part of the process.
Additionally, the Centre has already allocated 70 per cent of packaged non-domestic LPG to various states. An extra 10 per cent allocation will be provided to states that implement reforms promoting PNG adoption. The Centre has urged states to circulate the Natural Gas and Petroleum Products Distribution Order 2026 among departments, utilise reform-linked benefits quickly, and notify policies related to compressed biogas at the earliest.
The move comes against the backdrop of Middle East tensions that have affected energy supplies. The ministry has also noted a sharp rise in demand for smaller LPG cylinders, with around 7.8 lakh 5-kg free trade cylinders sold since March 23. On one recent day, sales crossed 1.06 lakh cylinders, significantly higher than the February average of about 77,000 per day.
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