 |
| LPG cylinders |
India Considers Gas Levy to Fund $42 Billion Strategic Fuel Reserve
NEW DELHI — August 5, 2026
India is considering introducing new charges on cooking gas and natural gas users to help finance a planned $42 billion strategic fuel reserve programme aimed at strengthening the country's energy security.
The proposal would expand India's emergency fuel reserves beyond crude oil for the first time by creating dedicated stockpiles of liquefied natural gas (LNG) and liquefied petroleum gas (LPG), commonly used as cooking gas. The plan is still under discussion and has not yet received final approval from the federal cabinet.
Under the proposal, the government would introduce small levies on LPG and natural gas consumption to help pay for the construction of storage facilities. Officials estimate the charges could generate around $1.5 billion each year.
The proposed LPG levy would be 1.29 rupees per kilogram, increasing the price of a standard household cooking gas cylinder by about 18 rupees. A separate charge of 1.43 rupees per standard cubic metre has been proposed for natural gas users.
Officials have not yet decided how the levies would be collected. According to the proposal, revenue from the charges would mainly fund new storage infrastructure for LNG and LPG, while crude oil reserves would continue to be financed directly by the central government.
The programme is expected to run over the next decade. Government estimates suggest India will need an additional 28 million metric tons of crude oil storage, 9 million tons of LNG storage, and 4 million tons of LPG storage to meet its long-term energy security goals.
The proposal follows recent disruptions to global energy supplies linked to conflict in the Middle East, which exposed India's heavy dependence on imported fuel. India imports nearly 90% of its crude oil, making it one of the world's largest oil importers and particularly vulnerable to supply disruptions and higher international prices.
Officials believe larger emergency reserves would help protect the country against future geopolitical crises and supply shortages. The planned reserves are designed to cover about two months of crude oil and LNG demand and approximately six weeks of LPG consumption.
India currently has government-owned strategic crude oil storage capacity of 5.33 million metric tons, with another 6.5 million tons under construction. However, the country does not yet have dedicated strategic reserves for LNG or LPG.
Compared with several major Asian economies, India's emergency fuel reserves remain relatively limited. Current government-controlled reserves cover less than 10 days of demand, while countries such as Japan and South Korea maintain reserves exceeding 100 days.
The proposed charges could increase household gas bills by around 2%, making the plan politically sensitive as consumers continue to face elevated energy costs. Government ministries have not publicly commented on the proposal, and officials stress that discussions are ongoing before any final decision is made.
