LPG: The whole way we calculate subsidies for domestic LPG cylinders is about to change. Reports say that last month, state-owned oil companies inked annual supply deals with US exporters, which has led the government to think about changing the LPG subsidy formula. Right now, the subsidy is based on the Saudi Contract Price (CP), the benchmark for LPG supplies from West Asia.
But now, state-owned oil companies want to include the US standard price and the logistics costs for transatlantic shipments in the formula. For India, LPG from the US is only a good deal if the price discount compared to the Saudi CP is significant enough to cover the logistics costs, which are roughly four times higher than those from Saudi Arabia.
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Last month, Indian Oil Corp., Bharat Petroleum Corp. Ltd., and Hindustan Petroleum Corp. Ltd. signed a one-year deal to import about 2.2 million metric tons per annum (MMTPA) of LPG from the US for the 2026 contract year. This accounts for about 10% of India’s yearly LPG imports. While Indian companies have bought American LPG on the spot market before, this is their first long-term supply contract with the country. The government sets the price of LPG sold to households by state-owned companies. When these companies lose money by selling below market rates, the government steps in to compensate them.
So, will LPG prices go up?
As mentioned earlier, the logistics costs for LPG imported from the US will be four times higher than those from Saudi Arabia. If the Indian government wants to keep providing gas cylinders to the public at the current subsidy rate, getting a discount on US supplies is essential. If that doesn’t happen, the government might reduce the subsidy for the public in the future. This could mean that LPG gas cylinders might become pricier for everyone, including the general public and the millions of customers under the Ujjwala Yojana.
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What’s the current price?
As per IOCL data, a domestic gas cylinder in Delhi is priced at Rs 853 with a subsidy, while a commercial gas cylinder costs Rs 1,580.50. The last adjustment for the domestic gas cylinder price happened on April 8, 2025, when the government raised it by Rs 50. Currently, users under the Ujjwala Yojana receive a subsidy of Rs 300. As of December 1, 2025, there are 10.35 crore beneficiaries of the Ujjwala Yojana in the country. This financial year alone, 2.5 million new beneficiaries have joined the scheme, and the total number of LPG users in India is around 33 crore.