The government has set a target to raise the share of natural gas in energy mix to 15 per cent in 2030 from about 6.3 per cent now.

India is among the top liquefied natural gas (LNG) importers in the world. In fact, increasing imports of LNG is part of the trade talks between the US and India too, according to market buzz. Among India’s top list of LNG import countries are Qatar, the US and the UAE. Other significant suppliers to India include Angola and Oman.

Domestically the government has set up at various committees to suggest ways of increasing the intake of gas in India’s energy basket. But, success has been slow. What could be the reason for the slow progress, when there is complete government backing? Is it infrastructure or the politically sensitive issue of pricing?

Recently, “Vision 2040 - Natural Gas Infrastructure in India” report was submitted to the Petroleum and Natural Gas Regulatory Board (PNGRB). The PNGRB has been mandated to develop infrastructure to transport natural gas to consumers across the country.

According to DK Sarraf, Chairman of the Committee, “What is important is to have non-discriminatory, transparent and consumer friendly processes for allocation of gas infrastructure enabling the shift to this fuel easier.”

“The overarching purpose is to align the growth of natural gas infrastructure with national priorities on sustainability, economic resilience, and global energy leadership, ensuring that natural gas remains an engine of inclusive, clean, and secure energy transition,” Sarraf said.

All stakeholders, including the Government and regulator, need to work collectively to ensure adequate regasification infrastructure, pipeline connectivity, and supportive policies to capitalise on lower LNG prices due to the expected glut in global supplies in the coming years, Sarraf added.

According to the report, under the base case scenario, India’s natural gas demand is projected to grow from approximately 260–300 MMSCMD in 2030 to 365–500 MMSCMD by 2040. Domestic gas production is expected to reach 120 MMSCMD in the near term, but may settle at a lower level by 2030. This implies a rising dependence on imported regasified liquefied natural gas (R-LNG), necessitating secure long-term contracts, diversified supply sources, and an efficient import and distribution infrastructure.

Complex pricing

Domestic gas pricing in India is a complex and evolving process, balancing the need for affordable energy will be the key to make this fuel also sought after. Currently, the domestically produced gas price in India is much cheaper than imported gas, thus making it unviable to produce. The current gap between domestically produced gas sold at government decided price — $6.7/ mmBtu and spot LNG price of around $11.00/mmBtu excluding added costs of taxes and levies, transportation.

There are two aspects to this issue, encouraging domestic production and encouraging easy access to user industry at a time of low cost imports.

“A massive wave of new LNG export capacity, combined with sluggish demand growth, is expected to push global LNG markets into oversupply in the 2028-2030 time period. This impending surplus will likely exert downward pressure on LNG prices, creating a strategic advantage for India. Lower LNG prices will enhance the affordability and accessibility of natural gas, particularly benefiting the fertilizer, power, and CGD sectors. Indian gas marketing companies can capitalise on this supply wave by securing long-term LNG contracts at competitive pricing. Additionally, the availability of cheaper RLNG is expected to boost natural gas consumption in India’s price-sensitive market, further supporting the transition toward a gas-based economy,” the report said.

Indian stakeholders need to ensure adequate regasification infrastructure, pipeline connectivity, and supportive policies to fully capitalise on lower LNG prices, Sarraf added.

Tax pain

Another pain point is the taxation landscape for natural gas in the country. Inclusion of natural gas under GST regime in lower tax bracket with input tax credit has been a long standing demand of the industry. Meanwhile, State governments can also look at reducing the VAT.

Besides, pricing another important issue is gas storage. “India’s growing reliance on natural gas imports, driven by efforts to achieve 15 per cent gas share in the energy mix, highlights the need for robust gas storage infrastructure. Currently, India’s LNG storage capacity covers approximately 12 days of total gas consumption in the country, leaving the nation vulnerable to geopolitical risks and supply fluctuations. The development of strategic gas reserves in India faces key challenges such as high cost and infrastructure development, regulatory gaps, and geological constraints,” the report pointed out.

India needs a comprehensive and robust regulatory framework to guide the creation, maintenance, and utilisation of strategic gas reserves, creating a transparent market which is not monopolistic, while making all efforts to encourage domestic exploration and production.

Meanwhile, the incentive gap between domestic and imported gas needs to be bridged.

Published on November 26, 2025