The Iran war has led to a shortage of LPG, pushing many restaurants to the brink of shutdown. Even as India counts on Iran for a safe passage to its ships, the Centre invoked the Essential Commodities Act. Anvitii Rai explains the Act, its evolution, and why panic buying might land a person in jail
l What’s Essential Commodities Act?
The Essential Commodities was enacted in 1955 by Parliament following the food shortages and supply chain issues at the time. The law was introduced with the goal of “providing, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce, in certain commodities”. Generally, it strives to prevent situations where the supply of essential goods is disrupted owing to speculation, hoarding, or supply shocks.
The ECA gives the government the authority to impose stock limits, price controls, licensing requirements, and restrictions on storage or movement of goods. In the past, items that have been covered include foodgrains, fertilisers, edible oils, petroleum products, and cattle fodder.
The ECA can be invoked when a commodity’s supply falls short and its price spikes, and stockholding limits can be notified for a specified period. The states implement this notification, specifying limits and taking steps to ensure compliance; however, they can choose not to do so. If they do, traders must dispose of stocks held beyond the prescribed limit.
l Which commodities are included in the Act?
The list of commodities included is not fixed, and can be changed by the Centre via a notification, and also subsequently removed once the crisis has passed. That is why tomatoes, onions, or wheat have sometimes shown up on the list and then were taken off after seasonal price spikes ebbed. A 2020 amendment introduced a new way to classify agricultural products by delisting these and other products such as pulses, oilseeds, and edible oils.’
The amendment gives the government the authority to control prices and supply only during extraordinary circumstances or price rises and natural calamities.
Currently, the list includes drugs, fertilisers, foodstuffs (including edible oils), hank yarn, petroleum and its products, raw jute and its textiles, and seeds (fruits, vegetables, and cattle fodder).
l How is govt regulating LPG?
India imports 60% of its liquefied petroleum gas (LPG), and ~90% of the imports pass through the Strait of Hormuz. In the wake of the crisis, the Centre has directed refineries to maximise LPG output by diverting propane and butane, while refining crude oil, towards its production. Further, all supply is to be redirected to the three state-owned petroleum marketing companies—Indian Oil, Bharat Petroleum, and Hindustan Petroleum.
The notification has also categorised LPG demand into four categories—category 1 includes piped natural gas for households, compressed natural gas for transport, LPG production, and fuel required for pipeline operations, it will receive 100% of its recent average supply; category 2 includes fertiliser plants, and will receive at least 70% of recent average consumption; category 3 covers grid-connected industries, including tea and other manufacturing units, and will get around 80% of usual supply; and category 4 includes industrial and commercial users connected to city gas networks, they will also receive about 80% of recent supply.
l Who can enforce ECA and what are the penalties?
The Central Government can invoke the ECA under appropriate circumstances under Section 3, and it can regulate production, supply, distribution, stock limits, and prices. Under Section 5 of the Act, the Centre may delegate its powers under Section 3 to state governments or authorised officers, enabling enforcement at the grassroots. The relevant authorities may confiscate illegally stockpiled goods as well as the transportation and storage used for them, and these are often auctioned or distributed through fair price shops. They are also allowed to conduct investigations and raids to ensure compliance.
Individuals or traders violating orders issued under Section 3 face strict penalties. Punishments include imprisonment ranging from three months to seven years as well as fines. These help discourage black marketing and unlawful stockpiling of essential goods during crises.
l Recent instances when it was invoked
The ECA has been invoked several times in recent years to manage supply shocks, and typical triggers include food inflation and hoarding concerns.
In 2025 and 2023, stock limits were imposed on wheat to control prices. Limits for traders, wholesalers, retailers, and processors were revised. These regulations are still in place, lasting till the end of this month.
In 2022, the Act was used to monitor pulses and sugar supplies—sugar exports were capped at 10 million tonnes in May that year following record high exports to ensure domestic supply, and stocks for tur were regulated in response to rising prices.
During the Covid-19 lockdown in 2020, the law was used to prevent hoarding and ensure availability of essential goods, and the Centre also included masks and sanitisers in the list for a while.