India’s push to expand the role of natural gas is a strategic response to energy security, urban air quality and decarbonisation priorities. Recent policy commitments and infrastructure milestones in FY2024‑25 and early FY2025‑26 show how City Gas Distribution (CGD), LNG regasification terminals and pipeline/connectivity investments are converging to deliver cleaner, more flexible fuel access for households, transport and industry.
Policy Direction and Investment Momentum
Government targets and recent capacity additions point to a deliberate pivot. The central objective of raising the share of natural gas in India’s energy mix to around 15% by 2030 has set the direction for investments across the value chain. Complementary developments in regasification capacity and network expansion have begun to close the supply–demand gap, enabling greater downstream adoption of PNG and CNG.
Expanding LNG Import and Regasification Capacity
LNG import and regasification capacity expanded materially during FY2024‑25. With the commissioning of additional terminals, India’s onshore regasification capacity rose to roughly 52.7 MMTPA (about 190 MMSCMD) by mid‑2025. This enlarged terminal base provides the physical import capability needed to support industrial clusters, peak-season demand and new CGD territories.
For FY2024–25, official PPAC datasets and derived government analyses show that India imported roughly 31.8 billion cubic meters (bcm) of LNG, representing an import dependency of about 47–51% of total gas consumption.
From a financial lens, the sector remains strong despite infrastructure hurdles. GAIL reported a record PAT of ₹11,312 crore in FY25 (up 28% YoY), with its CGD entities holding over 54% market share and combined CNG-PNG volumes of 15.4 MMSCM. IGL recorded ₹1,468 crore PAT, serving over 3 million PNG connections.
These numbers validate the business case that CGD operations typically deliver EBITDA margins of 18-25%, though volatile global LNG pricing and domestic APM gas allocation constraints introduce earnings volatility. For CFOs and treasury teams, this translates to careful hedging strategies and pass-through mechanisms in customer contracts to protect unit economics.
Connectivity: The Backbone of the Gas Ecosystem
Connectivity remains the critical enabler. India’s natural gas transmission network has been expanded significantly over the last decade and continued to grow through FY2024‑25 with new trunk pipelines, spur lines to industrial clusters and pipeline inch‑kilometre additions that improve access to eastern and inland markets. The combination of trunk pipeline growth and targeted mini‑LNG/FSRU solutions is reducing geographic imbalances in supply availability.
Policy adjustments and regulatory oversight are improving alignment between capacity and utilisation. Recent PNGRB regulatory changes for CGD authorisation and clearer rules around terminal operations and transparency aim to reduce speculative infrastructure development and encourage demand‑driven siting of terminals. This regulatory focus is intended to raise terminal utilisation rates, streamline evacuation planning and protect consumer tariff fairness.
Key Challenges and Structural Bottlenecks
Challenges persist. Terminal utilisation remains uneven because pipeline evacuation or downstream demand is yet to be fully synchronised in many regions. Land and environmental clearances, right‑of‑way issues for pipelines, and affordability pressures due to global LNG price volatility constrain full realisation of potential. Addressing these requires coordinated planning across Ministries, timely regulatory approvals and finance models that de‑risk long‑tenor infrastructure investments.
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