India- one of the world’s fastest-growing major economies now faces the dual challenge of meeting surging energy demand while enhancing energy security and transitioning toward a cleaner, more sustainable mix. And, at this juncture natural gas has emerged as the critical bridge fuel in this transformation, offering lower emissions than coal or oil while supporting industrial growth, urban mobility, and power generation. The rise of natural gas infrastructure in India encompassing pipelines, LNG terminals, City Gas Distribution (CGD) networks, and Compressed Natural Gas (CNG) stations- is central to achieving the government's vision of raising natural gas's share in the primary energy basket to 15% by 2030 from the current ~6-6.5%.
PHD Chamber of Commerce and Industry (PHDCCI), a premier industry body, has been at the forefront of advocating for robust hydrocarbon policies. Through events like the Hydrocarbons Summit 2026 and LNG Bunkering Summit, PHDCCI has been facilitating dialogue between policymakers, regulators, and industry leaders to strengthen India's energy security amid global uncertainties. In this article, we will have an in-depth analysis of India’s evolving energy security architecture, the strategic role of natural gas infrastructure, and the economic imperatives for domestic industry.
The Import Dependency Problem
India's energy security challenge is best understood through its import numbers. The country's crude oil import dependency has climbed steadily over the past decade, rising from roughly 77% in 2013-14 to around 89% in FY26, even as refining efficiency has improved by about a third since the late 1990s. India's crude oil import bill reached approximately $140 billion in 2025-26, representing nearly 40% of the country's total merchandise imports and creating persistent pressure on the current account.
This dependency is compounded by a decline in domestic production. India's domestic crude oil production fell 22.3% between 2015-16 and 2024-25, even as demand rose. Proved crude oil reserves have also declined by about 12% over the past decade, while natural gas reserves have fallen even more sharply - down nearly 25% since 2014 - indicating that India's subsurface hydrocarbon base is not being replenished at the rate it is being consumed.
The geopolitical dimension of this vulnerability was on full display during the Iran conflict in early 2026, when crude prices spiked to $95-100 per barrel, straining India's import bill and currency. India's strategic petroleum reserve, at roughly 36.87 million tonnes, provides only about 18 days of consumption cover - far below the International Energy Agency's recommended 90-day buffer. This gap significantly limits India's negotiating leverage with suppliers during a crisis and underscores why diversification of both supply sources and fuel types has become an urgent priority. In response, India has diversified its crude sourcing to around 40 countries as of March 2026, while continuing to rely heavily on Russian barrels, Iraq, Saudi Arabia, the UAE, and the United States.
Against this backdrop, projections suggest India's oil demand could rise from about 5.5 million barrels per day in 2024 to 8 million barrels per day by 2035 - the largest increase of any country in the world - pushing oil import dependency toward 92% even as India works to expand domestic exploration and refining capacity toward 300+ million tonnes per annum by 2028.
Why Natural Gas Has Become the Strategic Fulcrum
It is in this context that natural gas has taken on outsized importance in Indian energy policy. Unlike coal, gas burns cleaner; unlike renewables, it can provide firm, dispatchable power and serve as industrial and transport fuel through pipelines rather than fragile fuel-cylinder supply chains. The government's Hydrocarbon Vision 2030 sets an explicit target of raising natural gas' share in India's primary energy basket from around 6-7% today to 15% by 2030 - more than doubling its role within a decade.
Natural gas is also being positioned as a "transition fuel" - a bridge that lets India cut emissions intensity and reduce reliance on coal and imported crude while renewable capacity and storage technologies continue to mature. Industrial demand - spanning power generation, manufacturing, fertilizers, and petrochemicals - currently accounts for roughly 55-60% of natural gas consumption, while residential piped gas remains comparatively underdeveloped, representing a significant untapped growth opportunity as City Gas Distribution networks expand.
However, India remains structurally gas-deficient. Domestic natural gas output, after peaking at 47.6 billion cubic metres (bcm) in 2010-11, fell to a low of 28.7 bcm in 2020-21 before recovering partially to around 34.8 bcm in 2025-26 - a recovery driven substantially by Reliance Industries' KG-D6 fields, though these have faced geological complications including water influx and sand production issues that have slowed the pace of new output. As a result, LNG imports now account for just over half of India's total gas availability, up sharply from about 41% a decade ago, cementing India's position as one of the world's largest LNG importers.
Building the National Gas Grid: The Midstream Backbone
A gas-based economy cannot function without an expansive, interconnected, and open-access pipeline network. India's National Gas Grid is undergoing its most aggressive buildout in history to connect major production basins and LNG import terminals with high-demand inland consumption clusters.
Data from the Petroleum Planning & Analysis Cell (PPAC) Ready Reckoner indicates that India has expanded its operational natural gas pipeline network to over 25,925 kilometers, with an additional 7,300+ kilometers actively under construction to achieve the total target network of ~33,500 to 34,200 kilometers.
Key Mega-Pipeline Corridors
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Jagdishpur–Haldia & Bokaro–Dhamra Pipeline (JHBDPL) / "Pradhan Mantri Urja Ganga": Spanning over 3,300 km, this arterial pipeline is revitalizing Eastern India, supplying gas to anchor fertilizer plants in Gorakhpur, Barauni, Sindri, and Matix, while bringing City Gas Distribution (CGD) to major cities across Uttar Pradesh, Bihar, Jharkhand, Odisha, and West Bengal.
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Indradhanush Gas Grid (IGGL): A 1,656 km regional grid connecting all eight North-Eastern states, integrating remote domestic gas fields with the national grid and catalyzing industrial growth in the North-East.
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Mehsana–Bhatinda and Bhatinda–Jammu–Srinagar Pipelines: Extending connectivity across Northern India, ensuring clean energy access for industrial hubs in Punjab, Haryana, and Jammu & Kashmir.
Midstream Policy Reforms: Unified Tariff Mechanisms
Physical assets require supporting economic regulatory frameworks. PHDCCI has consistently engaged with the Petroleum and Natural Gas Regulatory Board (PNGRB) to refine pipeline tariff structures.
As highlighted in PHDCCI's Policy Submissions to PNGRB, tariff design must ensure fair pricing for downstream consumers- especially small and medium enterprises (SMEs) in energy-intensive hubs like the ceramic clusters of Morbi or glass manufacturers in Firozabad. The implementation of the Unified Pipeline Tariff System (a single handoff structure across multiple zones) has reduced transportation cost penalties for industries located far from coastal LNG terminals, promoting balanced regional industrial development.
The City Gas Distribution (CGD) Revolution: Last-Mile Energy Access
While trunk pipelines form the major arteries, City Gas Distribution (CGD) networks represent the capillaries that bring natural gas directly to homes, commercial establishments, factories, and transport fleets.
Following successful bidding rounds conducted by PNGRB, the CGD footprint has expanded dramatically. Today, 295 Geographical Areas (GAs) covering 784 districts across 34 states and union territories have been authorized, bringing gas coverage to over 98% of India's population.
As detailed in the PNGRB Infrastructure Reports, domestic Piped Natural Gas (PNG) connections have surpassed 16.7 million, while CNG stations nationwide exceed 8,690. Under the government's Minimum Work Programme, CGD operators are targeting 120 million domestic PNG connections and over 17,500 CNG stations by 2030–2034.
Sectoral Demand Drivers
According to market analyses from the MarkNtel India CGD Research Study, the Indian CGD market is projected to grow at a CAGR of 12.67% through 2032. Key consumption drivers include:
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Automotive Transport (CNG): Offering a 30–50% operational cost saving over petrol and diesel, CNG adoption in commercial passenger vehicles, auto-rickshaws, and urban bus fleets has expanded rapidly across Tier-1 and Tier-2 cities.
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Industrial & Commercial PNG: Manufacturing units in textiles, food processing, metallurgy, and chemicals are switching from high-polluting furnace oil (FO) and Light Diesel Oil (LDO) to PNG to meet environmental regulations and reduce operating costs.
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Residential PNG: Replacing traditional LPG cylinders with continuous, pressure-regulated piped natural gas enhances safety, eliminates delivery logistics, and improves household convenience.
LNG Terminal Expansion and Sourcing Diversification
Because domestic production cannot fully meet India's expanding natural gas demand, Liquefied Natural Gas (LNG) regasification infrastructure serves as a vital gatekeeper for national energy security.
India's total LNG regasification capacity currently stands at ~52.7 Million Metric Tonnes Per Annum (MMTPA), spread across key operational terminals:
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Dahej, Gujarat (Petronet LNG): India’s flagship and largest terminal, operating at high capacity utilization (~95%).
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Hazira, Gujarat (Shell): A strategic west-coast import hub serving Northern and Western industrial corridors.
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Dhamra, Odisha (Adani Total Private Limited): The first major LNG terminal on the east coast, bringing regasified LNG (R-LNG) to Eastern and Central states.
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Kochi, Kerala (Petronet LNG) & Ennore, Tamil Nadu (IOCL): Supplying southern industrial hubs.
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Jaigarh, Maharashtra & Chhara, Gujarat: Adding deep-water import capabilities to the national infrastructure.
To support the 15% gas target, national regasification capacity is projected to expand beyond 100 MMTPA by 2030.
Managing Supply Volatility: PHDCCI’s Strategic Perspective
In the wake of global energy supply line disruptions in West Asia, PHDCCI has emphasized that relying on spot LNG markets exposes Indian industries to severe price shocks. As detailed in ANI News reporting on PHDCCI's Energy Analysis, India must aggressively pursue long-term, indexed LNG contracts with geographically diversified suppliers—including the United States, Australia, Qatar, and Mozambique. Strategic long-term contracts cushion domestic buyers against short-term price spikes and protect vulnerable sectors such as fertilizer manufacturing and power generation.
Next-Generation Frontiers: Compressed Biogas (CBG) and Heavy-Duty LNG Mobility
To achieve true energy independence and meet decarbonization targets, natural gas infrastructure must integrate renewable gas alternatives and expand into high-emission transportation sectors.
Integrating Compressed Biogas (CBG) / Bio-CNG
Under the Ministry of Petroleum and Natural Gas’s SATAT (Sustainable Alternative Towards Affordable Transportation) initiative, India is establishing a decentralized bio-energy ecosystem. CBG, produced from agricultural residue (such as paddy straw), animal waste, and municipal solid waste, is chemically identical to natural gas and can be injected directly into local CGD networks.
At the PHDCCI Global Summit on Sustainability, industry leaders highlighted that CBG is a crucial vector for meeting CGD expansion goals. A notable milestone includes India's first steel pipeline-connected CBG facility in Batala, Punjab, which injects biogas directly into the city gas grid, eliminating the logistics costs of cascade truck transport. Mandating CBG blending within CGD networks creates a circular economy, reduces crop stubble burning, decreases LNG import dependence, and generates rural employment.
Revolutionizing Heavy-Duty Trucking with LNG
While CNG is effective for light-duty urban transport, long-haul heavy-duty freight trucks require the higher energy density of Liquefied Natural Gas (LNG).
Industry perspectives presented at PHDCCI events demonstrate that transitioning 10–20% of India's heavy commercial vehicles, mining equipment, and cement/steel haulage fleets to LNG could reduce transport sector emissions by up to 30%. Energy entities are collaborating to build 50+ LNG fueling stations along the Golden Quadrilateral highway corridors, laying the groundwork for low-emission logistics.
Strategic Recommendations: PHDCCI’s Roadmap for a Gas-Based Economy
To unlock the full potential of India’s natural gas infrastructure and achieve national energy security, PHDCCI recommends the following strategic policy initiatives:
1. Include Natural Gas Under the Goods and Services Tax (GST) Framework:
Natural gas remains outside the GST regime, subject to varying state VAT rates (ranging from 3% to over 24%) and cascading taxes. Bringing natural gas under a unified GST structure (with input tax credit benefits) would lower industrial input costs, promote inter-state gas commerce, and place gas on an equal tax footing with competing fuels.
2. Accelerate Infrastructure Status and Capital Allocations for Midstream Networks:
Expanding common-carrier pipelines in Tier-2/3 regions requires significant capital. Granting infrastructure status across all midstream storage, regasification, and distribution assets will facilitate long-term institutional financing, lower borrowing costs, and speed up project execution.
3. Enforce Priority Allocations for High-Impact Sectors:
To protect public transport affordability and agricultural food security, regulatory bodies should maintain priority allocations of Administered Price Mechanism (APM) domestic gas for CNG (transportation), domestic PNG, and fertilizer manufacturing.
4. Institutionalize Public-Private Partnerships (PPP) in CBG and LNG Corridors:
Strengthen co-investment frameworks between central/state governments, municipal authorities, and private industry to streamline land allocation, feedstock supply chains, and grid-interconnection approvals for biomethane and highway LNG stations.
Conclusion: Securing India's Energy Future
The transition to a gas-based economy is a core pillar of India's long-term economic strategy. Expanding national gas pipelines, building LNG regasification hubs, accelerating city gas connections, and integrating compressed biogas together form a resilient energy infrastructure capable of insulating the country from external market shocks.
As an apex industry chamber, PHDCCI remains committed to collaborating with government bodies, regulatory authorities, and private sector stakeholders. By executing well-structured policy reforms, encouraging capital investment, and expanding domestic infrastructure, India can build an energy-secure, economically competitive, and environmentally sustainable future.