India Ends LPG Curbs, Frees Up Feedstock for Petrochemical Producers

The Indian government removed all sectoral restrictions on non-domestic packed LPG on June 25, 2026, restoring commercial supplies to the levels seen before the West Asia crisis. The decision also eased the mandatory diversion of C3 and C4 hydrocarbon streams toward the cooking gas pool, freeing up feedstock that petrochemical producers had been forced to give up during the emergency. For the country's petchem industry, the change reverses several weeks of constrained operations.

The disruption began in mid-June 2026, when the closure of the Strait of Hormuz and the wider US-Israel-Iran conflict cut into shipments from the Gulf. West Asia accounts for roughly 90 percent of India's cooking gas imports, so the supply shock pushed the government to protect household kitchens first. Invoking the Essential Commodities Act, authorities ordered refiners to channel C3 and C4 streams almost entirely into LPG production. Those streams normally serve as feedstock for plastics, chemicals, and other downstream manufacturing, so the order effectively starved petrochemical units of raw material. Companies such as Reliance Industries had to trim profitable petrochemical output to help fill the LPG pool.

Over the following days the supply situation improved in stages. Indigenous LPG production strengthened, and imported cargoes began moving again once vessels could transit Hormuz more safely. A partial easing of shipping conditions followed the Iran-US Memorandum of Understanding signed on June 17, 2026, and oil tanker traffic through the strait recovered through the second half of the month. By June 25 the Ministry of Petroleum and Natural Gas judged that supplies were stable enough to roll back the emergency measures.

Under the revised arrangement, commercial packed LPG is once again available at full pre-crisis levels with no sectoral quotas. Bulk LPG supply, which had been suspended entirely when the crisis began, has been restored to 50 percent of pre-crisis consumption. The government also cut the share of C3 and C4 streams sent to the LPG pool, returning a larger allocation to petrochemical and other downstream sectors. To safeguard households, the ministry set a floor of 40 thousand metric tonnes per day for indigenous LPG output and stated that domestic availability must stay unaffected.

The Centre for High Technology, an arm of the ministry, will manage the allocation of the freed C3 and C4 streams across eligible petrochemical and critical sectors and report back regularly. Oil marketing companies have been directed to keep detailed records of commercial and industrial consumers and to build a unified database to improve monitoring. The government also signalled a longer-term push toward piped natural gas, with eligible commercial and bulk users to be moved onto PNG networks where connections exist.

For petrochemical producers, the immediate effect is a return of feedstock and the ability to ramp output back toward normal. The episode highlighted how exposed India's petchem supply chain remains to Gulf shipping routes, and how quickly feedstock can be redirected when cooking gas security is at stake. With the curbs now lifted, downstream plastics and chemicals makers can expect raw material flows to stabilise, though the government has stressed that household LPG will continue to take priority if conditions tighten again.