By Surabhi Gupta
New Delhi: India’s energy transition is also increasingly shifting to natural gas, but the recent jump in the availability of gas, driven almost entirely by imports of liquefied natural gas (LNG) raises even more questions. A 10% uptick in the total supply of natural gas reported for April 2025 by the Petroleum Planning and Analysis Cell (PPAC) conceals the much deeper reality that domestic gas production has stalled and that India’s growth in reliance on costly imported LNG is growing rapidly.
Even with new policies and a government that aggressively promotes using natural gas in their rhetoric of becoming a “gas-based economy,” the most recent consumption data, demonstrates divergent sectoral trends, where some (consumption) segments are cutting back, while others, like city gas distribution (CGD) appear to be growing.
Dr Sudhir Bisht, a petroleum sector expert, provided ETV Bharat with a critical update on the true nature of the numbers behind India’s natural gas data. His comments reveal a scenario characterised by structural inefficiency, dependency on the (international) market, and uneven policy implementation.
No Fixed Allocations: Demand Drives Sectoral Use, Not Supply Increases
Contrary to public perception, a 10% increase in natural gas availability doesn’t directly translate to more gas for city households or the power sector. “Natural gas is not allocated on a quota basis,” explained Bisht. “So a 10% increase in supply won’t automatically benefit a specific sector like city gas. The distribution remains demand-driven.”
Indeed, the April 2025 data shows that the fertiliser sector, which traditionally leads consumption, used 1,443 MMSCM, down from 1,652 MMSCM in April 2024. Meanwhile, CGD consumption rose to 1,281 MMSCM from 1,213 MMSCM. However, Bisht cautions against reading this as a deliberate reallocation of resources.
“The fertiliser sector’s demand has declined, but not because gas was unavailable, it’s more about sector-specific issues,” he said. “That’s why CGD’s share appears to rise. It’s not reallocation, just varying demand patterns.”
India’s Import Addiction: Nearly Half of Gas Is Bought from Abroad
Perhaps the most concerning aspect of India’s gas landscape is its increasing dependence on LNG imports. Bisht noted, “About 46% of our natural gas needs are met through imports, with the rest coming from domestic production. However, local gas fields are maturing, many of them by the end of FY2025, so our reliance on LNG imports is only going to grow.”
He pointed to future projections that show LNG imports reaching 103 billion cubic metres (BCM) by 2030, a 50% increase from the current 69 BCM. This rising dependency makes India vulnerable to global supply shocks, price volatility, and geopolitical tensions.
Will Gas Prices Rise for Consumers? Not So Simple
One natural concern is whether this import-heavy strategy will lead to higher gas prices for Indian households. While international prices influence city gas costs, the final rates for Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) are determined by a range of domestic factors.
“City gas pricing for PNG and CNG is also influenced by domestic allocation policies, infrastructure readiness, and taxes,” Bisht explained. “For now, PNG remains cheaper than LPG for most city dwellers not covered under the Ujjwala scheme, making it a preferred choice. CNG too is economically attractive, especially for commercial vehicles like cabs and autos.”
However, Bisht observed that the voluntary adoption of CNG among private car owners remains low. “It’s still largely driven by government mandates and lower fuel costs.”
No Supply Panic Yet: But Infrastructure Is the Key to Stability
Despite the clear mismatch between supply and demand, April’s consumption exceeded availability by 431 MMSCM, Bisht sees no immediate cause for alarm.
“I don’t foresee any major alarm or rationing for households or small businesses. Residential PNG demand is relatively stable and prioritized,” he said. “That said, the key to uninterrupted supply lies in ramping up infrastructure, more CNG stations, expanded pipeline networks, adequate storage, and vessel availability.”
With India targeting 33,000 km of pipeline coverage by 2030 (up from 22,000 km), connectivity will improve. But Bisht warns that this goal, while ambitious, is not the full picture. “Wider access depends on more than just pipeline length, it requires investment in distribution networks, terminal infrastructure, and last-mile connectivity. Urban areas will likely benefit sooner, while rural rollout will take time.”
Why Is Domestic Production Still Stuck in Neutral?
Even as the government rolls out reforms like the Oilfields (Regulation and Development) Amendment Act, 2025, real production gains remain elusive. April 2025 saw a 1.7% dip in domestic natural gas output, falling to 2,908 MMSCM from 2,958 MMSCM a year ago.
Bisht offered a sobering view, “Policy changes and new licensing rounds haven’t yet translated into significant production gains. This affects our energy costs and increases the subsidy burden on the government, especially when global prices surge.”
While initiatives like unlocking ‘no-go’ exploration zones and inviting foreign partners under a Right of First Refusal (ROFR) mechanism show promise, their long-term impact remains uncertain.
Crude Oil and Retail Prices: The Gap Between Policy and Reality
Union Petroleum Minister Hardeep Singh Puri recently remarked that Brent Crude is expected to remain stable at around $65 per barrel, suggesting the possibility of fuel price relief for consumers. But Bisht is sceptical.
“Minister Puri can make optimistic statements, but in reality, Indian consumers rarely enjoy the full benefits of falling global crude prices due to high taxes and marketing margins,” he said. “At the same time, when prices rise globally, some protection is extended to consumers. So, the link between crude prices and retail fuel rates is complicated.”
City Gas Distribution Is Expanding: But Is It Enough?
The city gas distribution (CGD) industry is still seeing modest growth, and the conditions are consistent with India’s objectives to clean the fuels used in cities. Both PNG and CNG are lower-emission, affordable fuels.
At the same time, Bisht says that “CGD with more coverage and outlets and confidence in the price” needs to be matched with infrastructure. “The future of CGD is greater infrastructure, better coverage, more outlets, and stable pricing to create confidence.”
On Biofuels and Green Hydrogen: Vision Is In Place, There Are Challenges
India’s clean energy goals have made significant headway. Ethanol blending is up to 20% in petrol, a year ahead of the 2025 goal. Yet, Bisht cautioned, “the success of biodiversity at the household level will be determined by affordability and logistics.”
On green hydrogen, the government’s objective to get to $1/kg in the next decade is a bold goal. However, we are unsure at this stage whether these technologies can replace conventional fuels at scale.
Subsidies, Ujjwala and Human Access: What’s In It for Me
LPG in India now exceeds 33 crore connections, and 10.3 crore connections are covered under the Ujjwala Yojana. Ujjwala has provided billions of rural households with the benefits of clean cooking fuels. Bisht indicated we need to maintain the subsidies and stable pricing.
“Without subsidies, many rural households could revert to traditional fuels, which would reverse the environmental and health benefits we’ve achieved,” he said.
For now, urban consumers with PNG and CNG access may continue to enjoy modest relief. But the broader population, especially in rural and semi-urban areas, will benefit only if infrastructure catches up with ambition. “Policy ambition is high, but delivery remains a work in progress,” Bisht concluded.