India's Ministry of Petroleum and Natural Gas is considering implementing a ₹1.29 per kg levy on LPG and ₹1.43 per standard cubic metre on natural gas, according to sources with direct knowledge of the matter. As reported by Reuters, these levies would raise approximately $1.5 billion annually through cooking and natural gas storage infrastructure financing. The proposed charges would add about 2% to household gas bills, representing a politically sensitive move for the Modi government amid elevated fuel prices. The ₹1.29 per kg LPG levy could increase a standard domestic cooking gas cylinder by approximately ₹18, while the ₹1.43 per standard cubic metre natural gas levy would impact household gas bills across the country. The exact method of collecting these levies has not yet been finalised, and the proposal is still under discussion between government departments.
The $42 billion decade-long strategic reserve programme will require significant storage capacity expansion, with the government estimating needs for 28 million metric tons of crude storage capacity, 9 million tons of LNG storage, and 4 million tons of LPG storage over the next 10 years. According to Reuters sources, the plan would extend India's strategic reserves beyond crude oil for the first time, covering approximately two months of crude and LNG demand, and around six weeks of LPG consumption. The reserves are expected to cover around two months of crude oil demand, two months of LNG requirements, and six weeks of LPG consumption, providing substantial protection against future supply disruptions. More than half of the investment would be directed towards constructing new storage facilities, while the remainder would be used to build the reserves themselves.
New Delhi currently maintains 5.33 million tons of government-owned strategic crude storage capacity, with another 6.5 million tons under construction, but lacks dedicated strategic reserves for LPG and LNG. As reported by Reuters, India's emergency fuel buffers currently cover less than 10 days of demand, significantly lagging behind major Asian peers like Japan and South Korea, which maintain more than 100 days of coverage. The country imports nearly 60% of its LPG, with a large share coming through the Strait of Hormuz, and officials report that nearly 50 lakh LPG cylinders are delivered daily across the country with no major supply shortages reported. India is the world's third-largest oil importer and consumer, importing nearly 90% of its crude oil requirements, making it vulnerable to geopolitical conflicts, shipping disruptions and price volatility.
The proposed levies were developed following supply disruptions linked to the West Asia crisis that drove up import costs and highlighted India's dependence on imported fuel. According to Reuters sources, the plan was drawn up after the U.S.-Israeli war on Iran and subsequent disruptions in the Strait of Hormuz, a key route for oil and gas shipments from Gulf producers to global markets. During a recent inter-ministerial briefing, officials said India was taking steps to maintain uninterrupted LPG supply, with Joint Secretary Sujata Sharma revealing that India has increased domestic LPG production by 28% following government measures. The funding mechanism is being discussed across ministries and has not yet received final cabinet approval from Prime Minister Narendra Modi's government, with the government expected to examine the funding structure, storage requirements and impact on consumers before taking a final decision.
