Despite the government’s stated policy goal of increasing the share of natural gas in India’s energy basket, consumption of the environmentally friendly fuel fell 8.6% annually in the April-October period of FY26, according to data from the petroleum planning and analysis cell (PPAC).
In absolute terms, consumption declined to 40,068 million metric standard cubic metres (mmscm) during the first seven months of FY26, compared to 43,583 mmscm over the same period in FY25.
Mint takes a close look at why natural gas consumption is declining, and how the government's plan to increase its share in India's energy consumption basket from 6% at present to 15% by 2030 is likely to shape up.
How has natural gas consumption trended in recent years?
India’s natural gas consumption has weakened so far in FY26 after seeing strong demand in FY25. In October 2025, about 5,722 mmscm of natural gas was consumed, 14.58% lower than 6,699 mmscm in October 2024. A total of 71,314 mmscmd was consumed in all of FY25, 5.6% higher than the 67,512 mmscmd consumed in FY24 amid high demand from the power sector.
India’s key sectors for natural gas consumption are the fertilizer (30.7% of consumption in FY25), refinery (12.6%) and power (13.8%) sectors, as well as the city gas distribution (CGD) network (20.9%), which carries compressed natural gas (CNG) for vehicles and piped natural gas (PNG) for homes.
Why has consumption fallen this year?
Experts said the primary reason for the drop is the almost complete lack of demand from the power sector, owing to a prolonged monsoon and power demand remaining below expected levels.
In FY25, gas-based power plants were put into action amid unprecedented high demand and concerns about inadequate electricity supply. This year, however, a prolonged monsoon cooled temperatures and did away with the need to operate gas-based power plants at full capacity. India has about 20 GW of gas-based power generation capacity, and owing to the high cost of the fuel compared to coal, most of this installed capacity remains idle.
Lower prices of alternative fuels such as liquefied petroleum gas (LPG) and crude oil have also hampered demand for natural gas in India. Prashant Vashisht, senior vice president and co-group head, corporate ratings, ICRA Ltd, also noted that while several new fertilizer plants were set up in the past two fiscal years, there have been no such additions this fiscal year, causing growth to stagnate.
What is the government’s target for India’s natural gas consumption, and is it achievable?
The union ministry of petroleum and natural gas aims to increase the share of gas in the overall energy basket to 15% by 2030 from the current 6.2%. However, progress so far has not been on expected lines, and experts Mint spoke to said the target wasn’t achievable by the end of the decade.
"The target of 15% is very optimistic. It doesn't seem achievable at least for some time. In order to achieve that target, India would have to consume 500 mmscmd meters of gas, against the current consumption of about 200 mmscmd," he said, adding that CGD and refineries could help grow natural gas consumption in the future. However, CGD accounts for only around 21% of India’s natural gas consumption and even a 10-12% increase would only translate to 1-2% growth in the overall gas consumption, he said.
What is natural gas so important?
Natural gas is a cleaner fuel than crude oil and coal, and is seen as an intermediate step in India’s ambitious energy transition. A report by PwC from September noted that India is the world’s third-largest energy consumer after China and the US, owing to improving standards of living, increased urbanization, growing industrialization and emerging sectors such as data centres. Energy usage has doubled since 2000, and with more than 80% of energy demand still being met by coal, oil and solid biomass, gas can play a key role in replacing these fuels, it added.
What is the long-term outlook for natural gas demand in India?
Despite near-term hurdles, demand is expected to grow in the long run. A joint report by PwC and Assocham titled 'Augmenting the role of gas in India’s 2030 energy mix and beyond' said gas consumption was expected to more than double from 52 million tonnes per annum (mtpa) in FY25 to 112 mtpa by FY40, in line with the country’s net-zero commitments. Natural gas will act as a ‘bridge fuel’ as India reduces its coal consumption and builds renewable capacity to meet its energy needs, the report said.