-
India has issued the Natural Gas (Supply Regulation) Order, 2026 to ensure stable gas supply by prioritizing sectors like cooking gas and transport amid global disruptions.
Amid mounting global energy disruptions and fears of supply shortages, the Indian government has issued the Natural Gas (Supply Regulation) Order, 2026, invoking provisions of the Essential Commodities Act, 1955 to prioritize critical sectors such as piped cooking gas, transport fuel and fertilizer production. The emergency regulation, notified by the Ministry of Petroleum and Natural Gas on March 10, comes as global energy markets reel from disruptions in liquefied natural gas (LNG) shipments linked to the escalating conflict in West Asia and logistical bottlenecks around the Strait of Hormuz — a vital route through which a significant portion of India’s LNG imports transit.
The government’s intervention aims to ensure equitable distribution of natural gas and uninterrupted availability of cooking fuel, particularly for households and essential sectors, even as global supply chains remain strained.
Priority sectors protected
Under the order, supply of natural gas has been reorganized into a priority framework based on average consumption over the past six months. The highest priority has been assigned to domestic piped natural gas (PNG), compressed natural gas (CNG) used in transport, LPG production and pipeline operational requirements, which will receive up to 100 per cent of their average gas consumption, subject to availability. The move is intended to ensure that households continue to receive cooking gas through PNG connections and that public transport and commercial vehicles running on CNG remain operational despite supply uncertainties. Fertilizer plants have been placed under the second priority category and will receive 70 per cent of their average gas requirement, ensuring continuity in fertilizer production critical for the agricultural sector. Meanwhile, industries such as tea manufacturing, factories and other users connected to the national gas grid will receive around 80 per cent of their average consumption, depending on operational availability.
Non-priority sectors may face cuts
To sustain supplies for priority sectors, the government has indicated that gas allocations may be curtailed for non-priority consumers, including petrochemical facilities and gas-based power plants if necessary. Oil refineries have also been asked to reduce their gas usage where feasible, with allocation expected to fall to around 65 per cent of their recent consumption levels. State-owned gas utility GAIL (India) Limited has been tasked with implementing the revised supply mechanism and coordinating distribution under the new priority framework.
LPG production ramped up
Alongside the allocation changes, the petroleum ministry has directed oil refineries to increase production of liquefied petroleum gas (LPG) and ensure that additional output is channeled specifically for domestic consumption. The move comes amid concerns that disruptions in LNG shipments and global supply chains could eventually tighten LPG availability in the domestic market.
Global energy turmoil triggers precautionary action
India’s regulatory step follows a sharp escalation in tensions in West Asia, which has disrupted LNG supply chains and forced several suppliers to invoke force majeure clauses.
Around 55 per cent of India’s LNG imports pass through the Strait of Hormuz, making the country particularly vulnerable to disruptions in the region’s energy infrastructure. Global gas markets have been further strained after Qatar Energy curtailed liquefied natural gas production at its massive Ras Laffan Industrial City following drone strikes linked to the ongoing regional conflict. Qatar is among the world’s largest LNG exporters, and any disruption in its production has a significant ripple effect across global markets, particularly in Europe where natural gas forms a major share of energy consumption. Analysts express concern that prolonged disruptions in the Gulf could push global energy prices higher and create supply pressures for countries heavily dependent on LNG imports. Against this backdrop, the Natural Gas (Supply Regulation) Order is seen as a preventive policy measure to stabilize the domestic energy ecosystem, ensuring that essential services, transport fuel supplies and fertilizer production remain insulated from global supply shocks. For millions of Indian households and industries reliant on natural gas, the order represents a strategic step to maintain stability as geopolitical tensions ripple through global energy markets.
However, analysist warn that escalating tensions involving Iran, Israel and the United States could pose significant economic and strategic challenges for India if the situation spirals into a wider regional conflict. A prolonged confrontation in West Asia is likely to push up global crude oil prices, disrupt vital shipping lanes and create fresh supply chain uncertainties for the import-dependent Indian economy.
A key concern is the security of the Strait of Hormuz, one of the world’s most critical energy chokepoints through which a large share of global oil and gas supplies pass. Nearly half of India’s crude oil imports, along with substantial shipments of liquefied natural gas (LNG) and liquefied petroleum gas (LPG), transit through this narrow waterway. Any disruption could sharply raise freight and insurance costs, delay cargo movement and inflate India’s energy import bill, potentially widening the current account deficit and fueling inflation. Beyond energy supplies, the conflict could also affect the availability of key raw materials such as petrochemicals, plastics and minerals used by Indian industries. Manufacturing sectors dependent on imported inputs may face shortages and rising costs if shipping routes are disrupted. The aviation sector could also feel the impact, as airlines may be forced to reroute flights to avoid conflict zones, increasing operational expenses and travel time. India also faces a delicate diplomatic challenge. New Delhi will need to balance its relations with the United States and Israel while maintaining engagement with Iran, particularly to safeguard its strategic investment in Chabahar Port. India’s economic ties with the Gulf region run deeper than energy. The region (GCC countries) accounts for roughly 22 per cent of India’s total exports (FY 25) and hosts millions of Indian workers, making stability in West Asia crucial for both trade and remittance flows. Major exports are driven by gem &jewellery ($8.3 billion in FY25), refined petroleum, engineering goods, and agricultural products like Basmati rice, spices, and marine products. The UAE acts as the primary hub, with bilateral trade reaching over $100 billion.
