MUMBAI: India’s restaurant industry has raised concerns after a government order prioritizing LPG (liquified petroleum gas, or cooking gas) production for household use triggered confusion over the availability of commercial cylinders used by eateries, as tensions in West Asia disrupt global fuel supply chains.
Industry bodies say the wording of the order has led some distributors to hold back commercial cylinders, raising fears of shortages for restaurants that rely heavily on LPG for daily cooking.
On 10 March, the government also invoked the Essential Commodities Act to prioritise natural gas supplies for city gas distribution and domestic LPG production, a move that could further tighten fuel availability for commercial users such as restaurants.
Mint explains what the order says, why restaurants are concerned and how the industry is responding.
What is the LPG issue affecting restaurants?
The issue stems from an order issued by the ministry of petroleum and natural gas on 5 March directing oil refining companies to prioritize propane and butane streams for LPG production and supply it to the three public sector oil marketing companies (OMCs)—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd.
The order also states that LPG procured by these companies should be supplied solely to domestic LPG consumers, a clause that triggered concern within the hospitality sector. Industry bodies say the wording created confusion on the ground, with some distributors interpreting it as a restriction on commercial LPG cylinders used by restaurants.
Restaurant associations have written to the government seeking urgent clarification to ensure uninterrupted supply.
How is LPG supplied in India?
LPG is produced at oil refineries and gas processing plants and supplied to public sector OMCs, which distribute it across the country.
More than 99% of domestic LPG in India is marketed through the three OMCs, which supply cylinders to households through distributors. Commercial users such as restaurants typically procure cylinders through the same distribution network under the commercial category.
India imported about 21 million tonnes of LPG in FY25, making it one of the world’s largest LPG importers. The country relies on imports for roughly 55–60% of its total consumption, with most supplies coming from West Asian countries including the United Arab Emirates, Qatar, Saudi Arabia and Kuwait.
What are industry bodies doing about the LPG supply issue?
Restaurant and hospitality associations have approached the government seeking urgent clarification.
The National Restaurant Association of India (NRAI) has written to the ministry requesting continued supply of commercial LPG cylinders to restaurants, warning that any disruption could lead to widespread closures. The association, which represents more than 500,000 restaurants with an annual turnover of about ₹5.7 trillion, said the industry is heavily dependent on LPG and that disruptions could affect food availability for consumers who rely on outside meals.
The Federation of Hotel & Restaurant Associations of India (FHRAI) has also written to the ministry seeking clarification after reports that distributors in some areas had begun holding back commercial LPG supplies.
Local industry bodies have raised similar concerns. The Bangalore Hotels Association warned that restaurants in the city could start shutting down from 10 March if commercial LPG cylinder supplies are not restored.
What could be the impact on restaurants and consumers?
Industry representatives say any disruption could significantly affect the restaurant sector, which depends heavily on gas cylinders for daily cooking. Estimates suggest that 80–90% of restaurants in India rely on LPG, as piped gas is available only in limited parts of large cities.
The food service industry supports a vast ecosystem of restaurants, cloud kitchens and street food vendors, meaning supply disruptions could affect businesses and consumers. A shortage could force restaurants to scale back operations or temporarily shut kitchens, potentially affecting food delivery platforms and urban consumers who rely on outside meals.
The impact could vary across the sector. Smaller eateries and street vendors that operate on thin margins and depend entirely on LPG cylinders are the most vulnerable. Larger restaurant chains or premium dining establishments may be better placed to absorb higher fuel costs or shift some operations to electric equipment, though they would still face operational challenges if supply disruptions persist.
How are restaurants trying to manage the situation?
Restaurant operators say they are taking steps to conserve LPG and prepare for potential shortages. Some kitchens are shifting non-core cooking activities such as staff meals or bulk preparation to induction stoves or electric equipment.
Others are reviewing menus and exploring dishes that require less LPG or can be prepared using alternative equipment. In some cases, chefs are being asked to prioritise cooking methods that rely less on gas while reserving LPG for core kitchen operations.
Industry representatives say these are short-term adjustments, as most restaurant kitchens in India are designed to run primarily on LPG cylinders and cannot easily transition to other fuel sources at scale.