India Raises Domestic Cooking Gas Price by ₹29 as State Oil Firms Absorb ₹703 Loss Per Cylinder
India’s state-owned oil marketing companies raised the price of a domestic 14.2-kilogram liquefied petroleum gas cylinder by ₹29 with effect from Saturday, June 7, pushing the rate in Delhi to ₹942 from ₹913 — the second increase in three months as the Strait of Hormuz crisis drives up import costs faster than the government has been willing to pass on to consumers. Industry sources said the increase had only partly offset losses incurred on domestic LPG sales, with state-run oil marketing companies estimated to be losing approximately ₹703 on every cylinder sold before the latest revision. U.S. Department of State
The increase follows a ₹60-per-cylinder hike on March 7 after the conflict in West Asia disrupted global energy supplies and drove up international fuel prices. The two combined increases — ₹89 per cylinder over three months — represent the steepest run of domestic LPG price rises since the Ukraine war drove a comparable surge in 2022. U.S. Department of State
The government has so far avoided passing on the full impact of higher international energy prices to consumers, a decision that has preserved household purchasing power in the short term but left the three state oil companies — Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum — absorbing substantial losses on every cylinder sold across the country’s approximately 300 million households. NPR
The gap between the market cost and the regulated consumer price is structural and widening. Despite the government’s efforts to stabilise the energy market, oil marketing companies are still facing heavy losses of around ₹700 on each domestic LPG cylinder, the Petroleum Ministry said on Thursday — a figure that predated Saturday’s ₹29 adjustment and that the revision only partially addresses. who
Commercial LPG had already been revised upward before Saturday’s domestic increase. Oil marketing companies raised prices of 19-kilogram commercial gas cylinders by ₹42 to ₹53 on June 1, and compressed natural gas prices were increased by ₹2 per kilogram on May 26, marking the fourth CNG hike since May 15. The combined effect took the total CNG increase to ₹6 per kilogram, with CNG now costing ₹83.09 per kilogram in Delhi. The sequential tightening of commercial and industrial gas prices before the domestic adjustment followed a sequencing that the government has used in previous energy cost cycles — raising non-household rates first to test political resistance before touching the politically sensitive domestic cylinder. who
Beneficiaries under the Pradhan Mantri Ujjwala Yojana, the government’s scheme providing subsidised cooking gas to low-income households, will continue to receive subsidies directly into their bank accounts through direct benefit transfers. That carve-out protects the programme’s roughly 100 million beneficiaries from the full ₹29 increase, though industry sources said the subsidy level has not been revised upward to compensate for the full extent of the cost escalation since February. worldbank
Regional and Global Impact
The LPG price rise is a direct fiscal consequence of the Strait of Hormuz closure that has been running since the US-Israeli strikes on Iran at the end of February. India imports a significant share of its LPG from Gulf producers whose export routes pass through Hormuz. With that route effectively closed, supply costs have risen and the three state oil companies have been absorbing the difference between international benchmark prices and the capped domestic rate. The ₹703 per-cylinder loss figure — disclosed by the Petroleum Ministry before the June 7 adjustment — illustrates the scale of the subsidy being implicitly provided through suppressed prices. At hundreds of millions of cylinders sold annually, the aggregate loss transferred to the balance sheets of Indian Oil, BPCL, and HPCL runs into several hundred billion rupees per year at current loss rates.
The Finance Ministry’s monthly economic review released on May 30 had already identified the Hormuz disruption as the dominant near-term risk to India’s inflation and external accounts. Saturday’s LPG hike confirms that the pass-through to consumers, which the ministry described as limited but coming, has now begun in earnest. The Reserve Bank of India’s monetary policy committee meets on Friday, June 6, against this backdrop — the LPG revision, announced late on Friday, will factor into its forward inflation projections.
Background
India’s domestic LPG market is controlled by the three state oil marketing companies, which set prices monthly in line with import parity benchmarks subject to government direction on the extent of cost pass-through. Before March 2026, a standard 14.2-kilogram cylinder in Delhi cost ₹853. The March 7 hike lifted that to ₹913, and Saturday’s revision brings it to ₹942. The ₹89 increase since March compares with a starting price of ₹853, representing a 10.4 percent rise in three months. In the previous energy cost cycle driven by the Ukraine war, a ₹50 increase in May 2022 pushed Delhi prices to ₹999.50 per cylinder before the government introduced targeted subsidies to offset the impact on lower-income households. India’s LPG consumption is among the highest in the world, with the government’s flagship Ujjwala Yojana scheme having extended cylinder access to rural households that previously relied on biomass for cooking. Wikipedia
What Happens Next
The oil marketing companies have not announced a forward pricing schedule, and further revisions will depend on the trajectory of international LPG benchmark prices and the rupee’s exchange rate against the dollar. Experts say global crude oil trends, geopolitical developments, and subsidy decisions will continue to influence LPG prices in the coming months. The Petroleum Ministry has not disclosed whether it has set an upper limit on the cumulative pass-through it will permit before reinstating direct cash subsidies for non-Ujjwala households. The outcome of the RBI’s June 6 monetary policy meeting — which will need to account for the accelerating energy cost pass-through — will shape the monetary policy response to what is becoming a sustained consumer price shock driven by the West Asia conflict. PBS
