Amid escalating tensions in the Middle East, India is facing a severe shortage of liquefied petroleum gas (LPG), severely disrupting daily life. The Hotel and Restaurant Association of Western India (HRAWI) estimates that roughly 30% of hotels and restaurants nationwide have been forced to suspend operations due to the “gas crisis.” In response, the Indian government announced it will increase commercial LPG sales quotas starting Monday (23rd) to alleviate the situation.

Structural Vulnerability: 60% Import-Dependent, 90% via Strait of Hormuz

India, the world’s second-largest LPG importer, relies on imports for about 60% of its supply, with approximately 90% of those imports transiting through the Strait of Hormuz. Military strikes by the U.S. and Israel against Iran on February 28 disrupted shipping through the strait, delivering a direct blow to India’s LPG supply chain.

Unlike China—the world’s top LPG importer, which primarily uses the fuel for petrochemical feedstock—India depends overwhelmingly on LPG for household cooking. It is a cornerstone of domestic food security, and any disruption risks triggering social unrest.

Hospitality Sector Hit Hardest, With One-Third Forced to Close

HRAWI reports that 30% to 35% of hotels and restaurants across the country have already shut down due to insufficient LPG. Those still operating are struggling to stay open, resorting to gas-saving measures such as shortening hours, simplifying menus, or raising prices.

In Mumbai, the All India Hotel and Restaurant Association (AHAR) said about 20% of establishments have closed, and if conditions don’t improve, nearly half could halt operations within two days. The sector is losing an estimated ₹1.2–1.3 billion ($13–14 million) per day.

Restaurants and hotels are especially vulnerable because LPG is the primary fuel for cooking. Brett Miller, who operates over 100 Mexican-themed restaurants across India, said his outlets have only enough LPG to last two more days, with some locations already switching to induction stoves.

Household Supply Crisis Sparks Panic Buying

Households are also feeling the pinch. In New Delhi and other cities, residents are lining up for days to secure LPG cylinders. Panic buying has driven daily demand from 5.5 million cylinders to 7.6 million, causing market chaos.

Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas, announced that under the Essential Commodities Act, domestic refineries have been ordered to halt plastic production to redirect capacity toward boosting household LPG output—a move expected to increase domestic production by 30%. The government has also imposed purchase restrictions: urban customers must wait at least 25 days between new cylinder refills, while rural users face a 45-day gap, aimed at curbing hoarding.

Industrial Shutdowns Spread, Tile-Making Hub Paralyzed

LPG-dependent industries are halting production en masse. In Morbi, Gujarat—a major tile manufacturing hub—nearly 450 of the region’s 670 tile factories have stopped operations. Ceramics, brick kilns, and other small and medium enterprises are also grinding to a halt, threatening broader industrial and commercial stability.

Government Response: Prioritizing Essential Needs

While directing refineries to ramp up LPG output, the government is prioritizing critical sectors. The Ministry of Petroleum and Natural Gas has issued a tiered allocation framework:

Priority Level | Beneficiaries | Supply Allocation

Highest | Household cooking, auto LPG, LPG production | 100% guaranteed

High | Fertilizer plants (key for agriculture) | 70%

Medium | Tea processing, manufacturing, small industries & commercial users | 80%

Low | Chemical plants, power stations (high-energy consumers) | Restricted based on availability

To address immediate commercial needs, the government announced a 20% increase in commercial LPG quotas effective March 23, bringing supply to roughly 50% of pre-conflict levels. Indian media reports suggest this measure may offer slight relief, but long-term concerns remain acute.