Indian households continue to receive cooking gas at prices significantly below international market levels, with the government and public sector oil marketing companies absorbing a substantial portion of the cost increase triggered by global energy market disruptions.
The Saudi Contract Price (CP) benchmark for LPG, which influences India’s import costs, has risen about 46 per cent between February and June 2026 following disruptions in West Asia and the Strait of Hormuz. Despite the sharp increase, the retail price of a 14.2 kg domestic LPG cylinder remains ₹942 for general consumers, while beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) effectively pay ₹642 after receiving a direct benefit transfer of ₹300 per cylinder on the first four annual refills.
Global price surge not passed on
According to government data, the import-linked cost of supplying a domestic LPG cylinder has now crossed ₹1,600. This means a non-PMUY consumer is paying nearly ₹700 less than the market-linked cost, while Ujjwala beneficiaries receive an effective discount of around 60 per cent on eligible refills.
The domestic LPG price remains regulated and is not revised automatically in line with international benchmarks, unlike commercial LPG cylinders used by hotels and businesses.
Commercial LPG prices have reflected global market movements more closely. In Delhi, a 19 kg commercial cylinder currently costs ₹3,113.50 following multiple price increases during the West Asia crisis.
Hormuz disruption pushes costs higher
India imports around 60 per cent of its LPG requirements, with a significant portion routed through the Strait of Hormuz. Following disruptions in the strategic waterway, the Saudi CP benchmark for LPG rose from around US$543 per tonne in February to nearly US$790 per tonne in June.
The increase sharply raised the cost of imported LPG, but authorities chose to shield consumers from the full impact.
The under-recovery, the difference between the actual import-linked cost and the regulated retail price, has grown substantially as a result.
Supply chain remains resilient
Despite concerns over energy supplies during the Hormuz disruption, India maintained uninterrupted petroleum and LPG supplies.
Government measures included increasing domestic LPG production by more than 60 per cent, from around 32 thousand metric tonnes to about 52 thousand metric tonnes, while expanding sourcing from countries including the United States, Canada and Algeria.
Indian-flagged vessels continued transporting crude oil and LPG cargoes through the Strait of Hormuz, ensuring there were no shortages of petroleum products across the country.
Authorities also encouraged consumers to switch to piped natural gas (PNG) where available and tightened anti-diversion measures to prevent subsidised domestic LPG from being diverted to commercial use.
Fiscal support rises
The burden of keeping domestic LPG prices low has increased significantly. Cumulative under-recoveries on domestic LPG rose to around ₹60,000 crore in the last financial year, compared with ₹41,338 crore a year earlier.
To support oil marketing companies, the Union Cabinet has approved compensation of ₹30,000 crore.
The under-recovery mechanism is separate from the subsidy provided under PMUY. More than 10.58 crore Ujjwala beneficiaries continue to receive ₹300 per cylinder directly into their bank accounts on eligible refills.
Among the world’s lowest cooking gas prices
Government estimates indicate that Indian households continue to pay less for cooking gas than consumers in neighbouring countries such as Pakistan, Nepal, Bangladesh and Sri Lanka. Domestic LPG prices also remain substantially lower than those prevailing in advanced economies including the United States, Australia and Canada.
Officials said the policy has ensured affordable access to clean cooking fuel despite extreme volatility in international energy markets and one of the most challenging supply disruptions in recent years.