Key facts
- India's LNG imports are set to reach a record 2.8 million tonnes in October 2026.
- Domestic gas production has declined 4% year-on-year in 2026.
- Fertilizer and city gas distribution sectors are driving gas demand.
- Government policy supports domestic gas production and CGD expansion.
- Coal shortages are increasing the potential need for gas-fired power generation.
India is on track to import a record 2.8 million tonnes of Liquefied Natural Gas (LNG) in October 2026, an 18% year-on-year increase, as domestic production declines and global prices surge. The country's gas consumption has risen significantly, while domestic output has stagnated, creating a widening supply gap. This has led to increased reliance on LNG imports, with supplies from Qatar and the UAE showing substantial month-on-month growth.
The demand for gas is primarily driven by the fertilizer production sector and city gas distribution (CGD) networks. Despite a 4% year-over-year decline in domestic gas production in 2026, fertilizer demand has remained resilient due to government prioritization, particularly ahead of upcoming elections. City gas distribution has seen significant growth, supported by expanded network coverage and a shift towards piped natural gas due to LPG supply disruptions.
To manage the supply gap, the Indian government has implemented policies including a price floor for domestic gas producers and a ceiling for residential buyers, while industrial consumers face global prices. This has put pressure on industrial profitability, though government subsidies and policy support have insulated the fertilizer sector from price shocks. The power sector's potential need for gas due to coal shortages further increases India's exposure to expensive LNG.