In a significant move to revive the hospitality and food processing sectors, the Ministry of Petroleum and Natural Gas (MoPNG) announced an additional 20% allocation of commercial LPG to states and Union Territories on Saturday, March 21, 2026. This takes the total cumulative allocation to 50% of pre-crisis levels, offering a vital lifeline to businesses that have struggled with severe fuel shortages since late February.
The new directive, issued by Petroleum Secretary Dr. Neeraj Mittal, is set to take effect from Monday, March 23, 2026.
The Roadmap to 50%
The restoration of commercial supply has been a multi-stage process, prioritized alongside the protection of 33 crore domestic household connections during the Strait of Hormuz blockade.
- Phase 1 (Early March): Initial restoration of 20% of average monthly requirements.
- Phase 2 (March 18): An additional 10% was offered, contingent on states facilitating the shift to Piped Natural Gas (PNG).
- Phase 3 (March 21): A final 20% boost approved, bringing the total to 50%.
Priority Sectors for the New Quota
The government has mandated that this additional 20% quantum must be distributed on a priority basis to essential “food-security” and public welfare segments:
- Hospitality: Restaurants, dhabas, and hotels.
- Public Welfare: Subsidised canteens, community kitchens, and government-run food outlets.
- Industrial: Industrial canteens, food processing units, and dairy units.
- Migrant Support: Distribution of 5 kg FTL (Free Trade LPG) cylinders for migrant laborers.
| Category | Allocation Status (March 23 Onwards) |
| Domestic Households | 100% (Fully Protected) |
| Hospitals & Schools | High Priority (Approx. 50% of total commercial pool) |
| General Commercial | 50% of Pre-Crisis Levels |
| Industrial (Non-Food) | ~80% of Natural Gas / Restricted LPG |
The “PNG Readiness” Mandate
The hiked allocation is not unconditional. To ease the long-term pressure on LPG imports (which have seen a 72% drop from West Asia this month), the government has imposed strict requirements:
- Registration: All commercial and industrial users must register with Oil Marketing Companies (OMCs) to be eligible for the 50% quota.
- PNG Application: Consumers in areas with existing City Gas Distribution (CGD) networks must apply for a Piped Natural Gas (PNG) connection.
- Demonstrated Readiness: Establishments must show they are taking steps to transition to PNG before they can receive the full increased LPG allocation.
Supply Outlook: A Stabilizing Market
The decision to hike the quota follows a notable improvement in the supply chain:
- Domestic Production: Indian refineries have increased LPG output by 40% by redirecting petrochemical streams (propane/butane) toward cooking gas.
- US Diversification: The first major cargoes from the 2.2 million tonne US deal have begun arriving, helping bridge the gap left by the Persian Gulf disruptions.
- Anti-Hoarding Action: Enforcement agencies have conducted over 3,500 raids nationwide, seizing roughly 1,400 illegal cylinders to prevent black marketing.
“While the geopolitical situation remains a concern, the increase in domestic output allows us to support the hospitality industry, which is a massive employer,” a senior Ministry official stated. “We urge businesses to use this window to permanently transition to Piped Natural Gas.”
