The automobile industry has urged the government to restore supply allocation of liquefied petroleum gas (LPG), piped natural gas (PNG) and propane to vehicle manufacturers and their ancillary units, warning that restrictions could disrupt production and strain supply chains across the country.
In a letter dated March 9 to Petroleum Secretary Neeraj Mittal, the Society of Indian Automobile Manufacturers (SIAM) requested the Ministry of Petroleum and Natural Gas to reinstate the allocation of these fuels and provide visibility on their availability for industrial consumers in the automobile sector.
The industry body said assured access to these fuels is critical for the uninterrupted functioning of manufacturing units.
Critical Manufacturing Processes
Automobile manufacturers and their vast network of component suppliers depend on LPG, PNG and propane for several heat-intensive processes in vehicle and component production. These include operations such as casting, forging and paint shops that require clean and controllable heat.
SIAM said advance clarity on fuel availability would help companies plan production schedules and minimise potential disruptions.
The industry’s request follows a government directive earlier this month prioritising LPG supplies for domestic cooking use. The order asked refineries and oil marketing companies to divert a larger share of propane and butane streams toward LPG production for household consumers.
Industry executives said the move has led to a halt in supplies of these fuels to automobile manufacturing units in some cases, raising concerns about production continuity.
In a separate communication to the Ministry of Heavy Industries, the Automotive Component Manufacturers Association of India (ACMA) also flagged emerging concerns over the availability of LPG and PNG for industrial operations, particularly for foundry, forging and machining units that form a critical part of the automotive supply chain.
The association noted that different states are applying varying regulatory norms governing the supply of these gases, adding to the uncertainty faced by manufacturers.
Impact on MSMEs
“Any disruption or uncertainty in the availability of LPG or PNG could impact production schedules of critical automotive components, particularly for MSME units, which have limited flexibility to transition to alternative energy sources in the short term,” ACMA said.
The component makers’ body has suggested that the government ensure continued availability of LPG and PNG for industrial users or provide a reasonable transition window for units to shift to alternative fuels.
It proposed that smaller foundry and forging units be allowed at least a month of continued LPG supply to enable technical and operational adjustments.
SIAM said the automobile sector and its supplier ecosystem have gradually transitioned from oil-based fuels to gaseous fuels over the years in line with environmental considerations and the push for cleaner manufacturing practices.
As a result, LPG, PNG and propane have become critical inputs for manufacturing operations across the industry.
The body added that shifting to alternative fuels is neither immediate nor easy, as it requires significant capital investment in infrastructure, compliance with safety protocols and regulatory approvals.
Fuel systems used in manufacturing facilities also operate under strict safety standards due to potential fire hazards, making rapid changes difficult for most units, the industry said.