LPG price hike: Government says rates in India among world’s lowest despite 46% jump in global benchmark

Indian households continue to pay among the lowest prices for cooking gas globally despite a sharp rise in international LPG prices triggered by disruptions in West Asia, the government said on Sunday (June 7, 2026), a day after hiking domestic LPG prices by ₹29 per cylinder.

While the price of a 14.2kg domestic LPG cylinder in Delhi has been increased from ₹913 to ₹942, beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) will continue to pay an effective ₹642 per cylinder after receiving a subsidy of ₹300 per refill on the first four annual refills instead of the 9 refills announced last year.

The increase follows an increase of ₹60 per cylinder on March 7, taking the cumulative increase to ₹89 per cylinder of 14.2 kg. State-run oil marketing companies were estimated to lose around ₹703 on every LPG cylinder sold before the latest revision.

The government said in a statement that the domestic cost of supplying LPG cylinders had risen to over ₹1,600 following a rise in international prices following the outbreak of war in West Asia at the end of February.

India’s LPG import costs are based on the Saudi Contract Price (CP), the fuel’s global benchmark. The benchmark index has risen nearly 46% since February after disruptions linked to the Strait of Hormuz tightened supply from the Gulf region, according to the statement.

Despite the increase, domestic LPG prices remain below those in neighboring countries such as Pakistan, Nepal, Bangladesh and Sri Lanka and are significantly lower than prices in developed economies such as the US, Australia and Canada, the government said.

The government also said that India was among the few countries that were able to maintain uninterrupted energy shipments through the Strait of Hormuz during the crisis, ensuring that there was no shortage of LPG or other petroleum products in the country. He added that domestic LPG production has been increased and supplies have been diversified through alternative source arrangements to maintain availability.

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According to the statement, cumulative under-recoveries on domestic LPG sales rose to around ₹60,000 crore at the end of the previous financial year, compared to ₹41,338 crore in the previous year. The Union Cabinet has approved compensation of ₹ 30,000 crore to state-run oil marketing companies to partially compensate for these losses.

The government said the latest revision ensures the continued availability of cooking fuel across the country, while balancing the need to protect households from volatile global energy prices.

“Prices of petroleum products in India are linked to the corresponding prices in the international market. However, the government continues to vary the effective price for domestic LPG to the consumer. Any household can purchase as many cylinders as it requires at Rs 942,” the statement said.

“A PMUY beneficiary will additionally receive a direct benefit transfer of ₹300 per cylinder on the first four refills every year – overall the average annual consumption of a typical Ujjwala household is around four refills per year – and thus will actually pay ₹642 for these refills; this subsidy will remain unchanged.”

Even a non-PMUY household will pay around ₹700 below the market-based cost of the cylinder.

Retail prices vary marginally between locations due to distribution costs.

“What households do not bear the brunt of is the few hundred rupees per cylinder that the government carries. During the period of sharp international cost increases, this burden was absorbed upstream rather than passed on to the consumer,” he said.

While the commercial cylinder used by hotels and workplaces is automatically revised every month because its price directly reflects the international benchmark, the domestic cooking cylinder is not the same.

“India was importing 60% of its LPG requirement and the import cost of these imports follows the Saudi Contract Price (CP) which Saudi Aramco sets at the beginning of every month. This is an external price over which the Indian consumer has no control,” the government said.

The indicator rose sharply due to disruption in West Asia. “Saudi LPG CP, expressed as the 50:50 propane-butane blend used for India’s LPG, was around $543 per tonne in February before the disruption. Following the closure of the Strait of Hormuz in late February, the April contract price – the first set after the disruption tightened Middle East Gulf exports – rose to $775 per tonne, with propane at $750 and butane at $800, and further since then.” rose to $790 per ton in June.”

The statement stated that the blended LPG reference value has increased by approximately 46% since the pre-crisis February level.

“The scale of this is fully visible in the market-priced commercial cylinder: The 19 kg cylinder used by hotels and restaurants is selling at 3,113.50 rupees in Delhi, or about ₹164 per kg, after five increases during the West Asian crisis. Households, on the contrary, pay about ₹66 per kg after the revision,” he said.

“Commercial gas has a higher tax rate and larger margins, thus being above the household cost pass-through level, while the import-related cost of a domestic cylinder is over ₹1,600.”

The government said it maintained uninterrupted supplies of LPG and other petroleum products despite disruptions in the Strait of Hormuz, a key shipping route through which 54% of India’s LPG imports are transported. Domestic LPG production increased by over 60% (from approximately 32,000 tonnes per day to approximately 52,000 tonnes); Imports were diversified to suppliers including the USA, Canada and Algeria, and the transportation of LPG cargoes to Indian ports was ensured, preventing problems in the domestic market.

To save on supply, consumers are encouraged to switch to piped natural gas where possible, while enforcement has increased against the diversion of subsidized LPG cylinders for commercial use through wider use of OTP-based delivery verification. The government said these measures helped maintain household supplies at a time of rising geopolitical tensions and supply chain disruptions.

“Inadequate recovery is separate from the subsidy: the difference between the international cost and the regulated retail price – an estimated amount that rose from ₹ 41,338 crore in the previous year to ₹ 60,000 crore in the last full year on domestic LPG – is borne by public sector marketing companies and the exchequer, for which the Union Cabinet has approved compensation of ₹ 30,000 crore; on top of this, Ujjwala consumers are borne by the per cylinder directly transferred to their bank accounts.” It gets an additional ₹300, which works out to more than 10.58 crore connections.” The statement was included.

It was published – 07 June 2026 11:08 IST