ndian hospitality sector reached a breaking point as a severe shortage of commercial LPG cylinders forced the closure of nearly 20% of hotels and restaurants in Mumbai, with similar shutdown warnings issued in Bengaluru and Chennai.
The crisis is a direct fallout of the Iran-Israel-US conflict, which has blocked the Strait of Hormuz—the transit point for over 85% of India’s LPG imports.
The “Domestic First” Policy
The shortage was triggered by a March 5 Ministry of Petroleum directive that invoked emergency powers under the Essential Commodities Act.
- Prioritization: Refineries have been ordered to maximize LPG production and supply it exclusively to the 33 crore domestic households to prevent a national cooking gas crisis.
- Commercial Rationing: While the government clarified there is no “official ban” on commercial LPG, suppliers on the ground are reportedly withholding stocks to meet the prioritized domestic demand.
- Price Spike: The price of a 19kg commercial cylinder jumped by ₹115 this week, marking the second consecutive weekly increase.
Impact on Major Cities
Industry bodies like AHAR (Indian Hotel and Restaurant Association) and the Bangalore Hotels Association have warned that the sector is on the verge of a total “paralyzed” state.
| City | Current Impact (March 10) | Warning / Outlook |
| Mumbai | 20% of establishments shut; supply halted since Sunday. | 50% could shut within 48 hours; menu items being limited. |
| Bengaluru | Operations began shutting today; only 10% received supply Monday. | Small eateries expected to run out of gas by tonight. |
| Chennai | Essential services (hospitals, hostels) flagged as “at risk.” | Associations seeking urgent PMO intervention. |
| Pune | Some gas-based crematoriums have shut temporarily. | Industrial clusters receiving only 40% of required gas. |
Government Response & “War-Room” Measures
The Ministry of Petroleum has moved into emergency mode today to prevent a total collapse of the food service industry:
- Three-Member Committee: A panel of Executive Directors from IOCL, BPCL, and HPCL has been formed to review and manage LPG allocations for “non-domestic” sectors like hotels and hospitals.
- Essential Sector Priority: The government is attempting to reroute existing commercial stocks specifically to hospitals, schools, and university hostels first.
- Sourcing Shift: India is fast-tracking 2.2 million tonnes of LPG from the US Gulf Coast, though these shipments take 45 days to arrive compared to the 4–6 day transit from the Middle East.
The “Black Market” Warning
Dealers have warned that the scarcity is pushing some commercial users toward the illegal and dangerous purchase of subsidized domestic cylinders. Authorities have intensified raids, but restaurant owners argue they have “no alternative” to keep their kitchens running for students and medical professionals who depend on them.
