The government has for the first time fixed maximum production targets for cooking gas LPG for individual public- and private-sector refineries and upstream companies, seeking to create a stronger domestic supply buffer after disruptions to imported LPG exposed India’s dependence on overseas supplies. The Petroleum and Natural Gas Ministry issued the order on August 13, setting production limits for 21 refineries and upstream companies that will apply whenever there is a supply constraint.
Reliance Industries has received the largest production target under the new framework. Its older refinery will be required to produce up to 18,000 tonnes of LPG a day when supply conditions trigger the mandated limits. The combined maximum production capacity assigned to the 21 companies is 63,810 tonnes per day, more than double India’s domestic LPG production in 2025-26 and equivalent to about 70% of the country’s daily consumption.
Government Creates LPG Production Buffer
The new production targets are intended to strengthen India’s ability to respond to LPG supply disruptions.
The government has traditionally relied heavily on imports to meet domestic cooking-gas demand. The disruption caused by the West Asia conflict and problems around shipping routes highlighted the vulnerability created by this dependence.
Under the new order, 21 refineries and upstream companies have been assigned maximum LPG production levels.
| Key Detail | Figure |
|---|---|
| Companies covered | 21 |
| Combined maximum production target | 63,810 tonnes/day |
| Reliance Industries target | Up to 18,000 tonnes/day |
| India’s LPG consumption in FY26 | 33.2 million tonnes |
| Average daily consumption | About 91,000 tonnes |
| Domestic LPG production in FY26 | 13.1 million tonnes |
| Domestic production per day | About 35,900 tonnes |
| LPG imports in FY26 | 21.3 million tonnes |
| Share of consumption met through imports | More than 64% |
| Trigger for production limits | Supply constraint |
The targets are not necessarily daily production requirements under normal market conditions. They establish maximum production levels that can be activated when supplies come under pressure. :contentReference[oaicite:1]{index=1}
Reliance Gets the Largest Production Target
Reliance Industries has been assigned the largest LPG production target under the government order.
Its older refinery will have to produce up to 18,000 tonnes of LPG per day when the production limits come into effect.
The allocation reflects the significant LPG production potential of Reliance’s refining operations.
Reliance’s Role
Reliance Industries
↓
Older refinery
↓
Up to 18,000 tonnes LPG/day
↓
Largest individual target
↓
Domestic LPG supply buffer
The target makes Reliance a particularly important contributor to India’s emergency LPG supply strategy.
India’s Heavy Dependence on LPG Imports
India consumed approximately 33.2 million tonnes of LPG during the financial year ended March 31, 2026.
Domestic production accounted for only about 13.1 million tonnes.
The remaining 21.3 million tonnes was imported.
This means more than 64% of India’s LPG consumption depended on imports during the year. :contentReference[oaicite:2]{index=2}
India’s LPG Supply Structure
LPG consumption
↓
33.2 million tonnes
↓
Domestic production
13.1 million tonnes
+
Imports
21.3 million tonnes
↓
More than 64% import dependence
The high level of dependence creates risks whenever international supply chains are disrupted.
West Asia Conflict Exposed Supply Vulnerabilities
The government’s decision follows disruptions caused by the conflict in West Asia.
India imports LPG from countries including Saudi Arabia and other major producers.
Much of this LPG arrives through maritime routes that can be affected by geopolitical tensions.
The Strait of Hormuz is particularly important because around 90% of India’s LPG imports from countries such as Saudi Arabia moved through the strategically important waterway, according to the report. :contentReference[oaicite:3]{index=3}
Strait of Hormuz Is Critical for LPG Imports
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Its importance to India’s energy supply extends beyond crude oil.
Large volumes of LPG also move through the route.
Import Risk
West Asia producers
↓
LPG shipments
↓
Strait of Hormuz
↓
Indian ports
↓
Refineries and distributors
↓
Households and businesses
Any major disruption along this chain can quickly create pressure on India’s domestic LPG supply.
Government Had Already Asked Refineries to Maximise LPG Output
The government took emergency measures earlier in 2026 after imports were disrupted.
In March, refineries were instructed to divert streams normally used for petrochemical production in order to maximise LPG output.
This demonstrated the government’s willingness to prioritize cooking-gas availability during a supply shortage.
The new production targets formalize a mechanism that can be used when similar supply constraints occur in the future.
New Targets Cover Public and Private Companies
The order applies to both public-sector and private-sector refineries and upstream companies.
This means the emergency production strategy is not limited to state-owned oil companies.
Private refiners such as Reliance will also play a major role in ensuring domestic availability.
Industry-Wide Approach
Public-sector refiners
+
Private-sector refiners
+
Upstream companies
↓
Combined LPG production capacity
↓
Emergency domestic supply
The approach gives the government a broader pool of production capacity to draw upon during shortages.
Combined Target Exceeds 63,000 Tonnes a Day
The 21 companies covered by the order have a combined maximum LPG production potential of 63,810 tonnes per day.
That is more than twice India’s domestic LPG output during FY26.
The combined target is also equivalent to around 70% of India’s average daily LPG consumption.
Supply Comparison
Domestic FY26 output
↓
About 35,900 tonnes/day
↓
Government-assigned maximum capacity
↓
63,810 tonnes/day
↓
Average consumption
↓
About 91,000 tonnes/day
The additional production capacity could therefore significantly reduce the scale of an import shortfall during a supply disruption.
Production Targets Will Apply During Supply Constraints
The government order does not mean that all companies must permanently produce LPG at their assigned maximum levels.
The limits are intended to come into effect when there is a supply constraint.
This distinction is important because refineries normally optimize their operations according to market demand, product economics and available feedstock.
Normal Conditions
Market demand
↓
Refinery economics
↓
Normal LPG production
Supply Constraint
Import disruption
↓
Government activates production framework
↓
Refiners increase LPG output
↓
Domestic supply buffer
The framework therefore functions as an emergency supply mechanism.
Refiners May Have to Change Product Mix
Increasing LPG output can require refiners to alter how they process their feedstock.
Some refinery streams can be directed toward petrochemicals or other products under normal market conditions.
During an LPG shortage, the government can encourage or require companies to prioritize cooking-gas production.
Refinery Flexibility
Crude oil
↓
Refinery processing
↓
Petrol + Diesel + LPG + Petrochemicals
↓
Supply shortage
↓
Greater LPG allocation
↓
Higher domestic LPG availability
The approach could help India respond more quickly to disruptions in imports.
LPG Demand Has Grown Rapidly
India’s LPG consumption has increased substantially over the years, supported by wider household access to cooking gas.
Government programmes have also expanded LPG connections among households.
As more households depend on LPG for cooking, maintaining reliable supplies has become an important energy-security issue.
Cooking Gas Is a Strategic Household Fuel
LPG is not simply another petroleum product.
It is directly linked to household cooking requirements.
A major shortage can therefore have immediate consequences for millions of families.
LPG Supply Chain
Imported or domestic LPG
↓
Processing
↓
Storage
↓
Bottling plants
↓
Distributors
↓
Households
Any disruption at the import or production stage can affect the wider chain.
Energy Security Is Driving the Policy
The new production framework reflects India’s broader effort to reduce vulnerability to external energy shocks.
The country remains heavily dependent on imports for several forms of energy.
Increasing domestic LPG production during emergencies can reduce the immediate impact of international disruptions.
Energy Security Strategy
Domestic production
+
Strategic reserves
+
Supply diversification
+
Emergency production targets
↓
Lower import vulnerability
The policy does not eliminate India’s need for LPG imports, but it provides another tool for managing disruptions.
Import Dependence Cannot Be Eliminated Immediately
Even with the new production targets, domestic output would not normally be enough to meet total consumption.
The government’s assigned maximum capacity of 63,810 tonnes per day is about 70% of average daily consumption.
This means imports would remain important even if companies reach their assigned maximum production levels.
Supply Gap
Potential domestic production
↓
63,810 tonnes/day
↓
Consumption
↓
About 91,000 tonnes/day
↓
Remaining gap
↓
Imports still required
The policy is therefore aimed at reducing vulnerability rather than achieving complete import independence.
Reliance Could Become More Important During Disruptions
With the largest assigned target, Reliance could become one of the most important private-sector contributors during an LPG supply crisis.
Its ability to increase LPG output quickly could help compensate for reduced imports.
The company’s refining scale gives it a significant role in the government’s emergency supply framework.
Public-Sector Refiners Also Have a Major Role
State-owned refiners remain important to India’s fuel supply system.
Companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum operate extensive refining and distribution networks.
Their LPG production and distribution capabilities can provide additional support during shortages.
The Policy Could Reduce Supply Shock Risks
A domestic production buffer can help reduce the impact of sudden import disruptions.
If international shipments are delayed, domestic refiners could increase output under the government’s framework.
This could give oil companies and distributors more time to arrange alternative supplies.
Supply Shock Response
Import disruption
↓
Domestic production target activated
↓
Refiners increase LPG output
↓
Existing inventories used
+
Alternative imports arranged
↓
Consumer supply protected
The effectiveness of the system will depend on how quickly the companies can increase output.
Storage and Distribution Are Equally Important
Producing additional LPG is only one part of the supply chain.
The country also needs sufficient storage, bottling and transportation capacity to move the additional LPG to consumers.
A production increase would have limited value if distribution infrastructure becomes a bottleneck.
Complete Supply Chain
Production
↓
Storage
↓
Transportation
↓
Bottling
↓
Distribution
↓
Consumer
All stages need to function efficiently during a supply disruption.
Government Will Need to Monitor Refinery Economics
Refiners may have to make difficult decisions when increasing LPG output.
Diverting feedstock or refinery streams toward LPG can affect production of other products.
The government will need to balance LPG security with the broader economics of the refining sector.
Impact on Petrochemical Production
One potential consequence of maximizing LPG production is reduced availability of certain streams for petrochemical production.
Refiners that produce LPG from streams otherwise used in petrochemicals could face an opportunity cost.
This trade-off became visible when the government ordered refineries to divert petrochemical feedstocks during the earlier supply disruption.
Impact on Fuel Markets
The new LPG policy is primarily focused on cooking gas rather than petrol and diesel.
However, refineries operate integrated systems.
Changes in product yields and refinery configurations can affect the broader petroleum-product balance.
This makes coordination across the energy sector important during an emergency.
Consumers Could Benefit From Greater Supply Stability
For households, the most important potential benefit is reduced risk of LPG shortages.
A larger domestic production buffer could help maintain cylinder availability even if international supplies are disrupted.
However, the policy does not automatically guarantee lower LPG prices.
LPG Prices Will Depend on Several Factors
Domestic LPG prices are influenced by international prices, import costs, exchange rates, government subsidies and other policy decisions.
Increasing domestic production could improve supply security but does not necessarily eliminate the impact of global energy prices.
LPG Pricing Factors
International LPG prices
+
Crude oil prices
+
Freight costs
+
Rupee exchange rate
+
Domestic production
+
Government policy
↓
Consumer LPG prices
The new production targets are therefore primarily a supply-security measure.
The Policy Could Strengthen India’s Refining Sector
The framework could encourage refiners to maintain greater flexibility in their production systems.
Companies with the ability to quickly adjust product yields could become more valuable during supply disruptions.
This may encourage additional investment in refinery flexibility and storage infrastructure.
Indian Oil Companies Could See Strategic Benefits
The new policy gives refiners a clearer role in India’s energy-security strategy.
Companies with large refining capacity and flexible operations could become important partners in future emergency responses.
Reliance’s large assigned quota highlights the importance of private-sector refining capacity alongside state-owned infrastructure.
What It Means for Reliance Industries
Reliance has received the largest individual LPG production target at up to 18,000 tonnes per day.
The target reinforces the strategic importance of its refining operations to India’s energy security.
During a supply constraint, the company could be required to shift its production mix toward LPG.
What It Means for Public-Sector Refiners
State-owned refiners will also be required to contribute to emergency LPG production.
The policy could increase coordination between the government and oil companies during periods of supply stress.
What It Means for Consumers
Consumers are unlikely to see an immediate change simply because production targets have been announced.
The targets are designed to operate during supply constraints.
Their main purpose is to ensure that India has a mechanism to increase domestic production when imports are disrupted.
What It Means for India’s Energy Security
The policy provides India with another layer of protection against international supply shocks.
It does not remove import dependence, but it creates a larger domestic production buffer that can be activated during emergencies.
What Investors Should Watch
Investors should monitor:
- Implementation of the LPG production targets
- Future supply constraints
- Reliance’s refining output
- Domestic LPG production
- LPG import volumes
- Strait of Hormuz developments
- International LPG prices
- Refinery margins
- Petrochemical feedstock availability
- Government intervention in fuel markets
- Domestic LPG demand
The effectiveness of the policy will become clearer during any future disruption to international LPG supplies.
Key Facts at a Glance
| Metric | Detail |
|---|---|
| Companies covered | 21 |
| Combined maximum LPG production target | 63,810 tonnes/day |
| Largest individual target | Reliance Industries |
| Reliance target | Up to 18,000 tonnes/day |
| FY26 LPG consumption | 33.2 million tonnes |
| FY26 domestic LPG output | 13.1 million tonnes |
| FY26 LPG imports | 21.3 million tonnes |
| Import dependence | More than 64% |
| Average daily consumption | About 91,000 tonnes |
| Combined target vs daily consumption | About 70% |
| Order date | August 13, 2026 |
| Trigger | Supply constraint |
Infographic: India’s New LPG Production Framework
INDIA’S LPG CONSUMPTION
↓
33.2 MILLION TONNES
FY26
↓
DAILY CONSUMPTION
ABOUT 91,000 TONNES
↓
FY26 DOMESTIC PRODUCTION
ABOUT 35,900 TONNES/DAY
+
IMPORTS
ABOUT 58,400 TONNES/DAY
↓
IMPORT DEPENDENCE
MORE THAN 64%
↓
NEW GOVERNMENT FRAMEWORK
↓
21 REFINERIES + UPSTREAM COMPANIES
↓
MAXIMUM COMBINED OUTPUT
63,810 TONNES/DAY
↓
ABOUT 70% OF DAILY CONSUMPTION
↓
LARGEST TARGET
RELIANCE INDUSTRIES
↓
UP TO 18,000 TONNES/DAY
↓
ACTIVATED DURING SUPPLY CONSTRAINTS
↓
DOMESTIC LPG SUPPLY BUFFER
↓
GREATER ENERGY SECURITY
The Bigger Picture
The government’s decision to establish LPG production targets for 21 refineries and upstream companies marks a significant shift in India’s approach to cooking-gas security. The country imported more than 64% of its LPG requirement in FY26, leaving it exposed to disruptions in international supply chains. The new framework creates a potential domestic production capacity of 63,810 tonnes per day, equivalent to about 70% of India’s average daily consumption. Reliance Industries has received the largest individual target, with its older refinery required to produce up to 18,000 tonnes a day when supply constraints trigger the framework. :contentReference[oaicite:4]{index=4}
The policy is not designed to eliminate LPG imports or require companies to operate at their maximum targets under normal market conditions. Instead, it creates an emergency mechanism that can be activated when imports are disrupted. The approach could improve India’s ability to manage geopolitical shocks, particularly those affecting critical shipping routes such as the Strait of Hormuz. However, higher LPG production can also require refiners to alter their product mix, potentially affecting petrochemical feedstocks and other refinery outputs. The success of the policy will ultimately depend on how quickly companies can respond and whether storage and distribution infrastructure can handle additional domestic production.
Looking Ahead
The immediate focus will be on how the government implements the production targets and how refiners prepare to increase LPG output when supply constraints occur. Reliance’s 18,000-tonne-per-day allocation makes its refinery operations particularly important, while public-sector refiners and other private companies will provide additional capacity. Future disruptions to LPG imports will provide the clearest test of whether the new framework can effectively stabilize domestic supplies.
Over the longer term, India is likely to continue pursuing a combination of domestic production, diversified imports, strategic storage and refinery flexibility to strengthen energy security. The new LPG targets represent one part of that broader strategy. While India will remain dependent on imports because domestic demand exceeds local production, the ability to rapidly increase refinery output could reduce the severity of future supply shocks and provide greater protection for households that depend on LPG for cooking.
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