India Invokes ESMA Powers, Directs Refiners to Increase LPG Production Amid Supply Risks

The Centre has invoked emergency powers under the Essential Commodities Act, 1955, directing oil refiners to increase the production of Liquefied Petroleum Gas (LPG). As per the news reports, the instruction was issued by the Ministry of Petroleum and Natural Gas on March 5, 2026. 

Refineries have been asked to maximise LPG output using available propane and butane streams. The order comes as authorities seek to prevent any disruption in cooking gas supply following tensions and supply risks linked to the West Asia conflict. 

Dependence on Imports Remains High 

India imports a large portion of its LPG requirement. Government data shows the country consumed about 31.3 million tonnes of LPG in 2024-25, while domestic production stood at around 12.8 million tonnes. 

As a result, more than 60% of LPG demand is met through imports. A significant share of these shipments originates from the Middle East, with around 85-90% passing through the Strait of Hormuz. 

Instructions for Refiners 

All refining companies have been directed to prioritise LPG production from propane and butane available with them. The order applies to both public and private sector refineries operating in the country. 

Refiners have also been asked to make the fuel available to the 3 public sector oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, which handle distribution to households. 

Limits on Petrochemical Production 

The government order states that propane and butane should not be used for producing petrochemicals or other downstream products. These streams are to be utilised only for LPG production. 

According to news reports, industry data indicates that propane and butane are also used to manufacture petrochemical products such as polypropylene and alkylates. Reliance Industries exported about 4 cargoes of alkylates each month last year, as per LSEG data. 

Alternative Sourcing Efforts 

Authorities are also looking at additional LPG supplies from outside the conflict zone. Public sector oil companies have signed a contract to import about 2.2 million tonnes of LPG from the US Gulf Coast in 2026. 

The quantity represents roughly 10% of India’s annual LPG imports and is part of plans to diversify supply sources. 

Read More: Karnataka to Announce Major Liquor Tax Reforms, Targets ₹45,000 Crore Excise Revenue! 

Conclusion 

The order is aimed at maintaining regular LPG supply for domestic use. Government figures show India has around 332 million active LPG consumers who depend on the fuel for household cooking. 

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