From fertiliser plants that sustain India’s farms to ceramic factories and CNG pumps powering millions of vehicles, the escalating war in West Asia is beginning to squeeze India’s natural gas supply chain, forcing policymakers to consider rationing gas across sectors as LNG shipments from Qatar remain disrupted.
India meets about half of its 195 million standard cubic metres per day (mmscmd) gas consumption through imports, making the country heavily dependent on overseas supplies.
Officials said the ongoing disruption has already created a significant shortfall. Across several industries, gas supply cuts of 10% to 30% have already been implemented in anticipation of tightening LNG availability.
“Nearly 60 mmscmd of gas is currently not available due to the closure of the Strait of Hormuz and the force majeure declared by Qatar,” a government official said.
Strategic Buffers
The government is now weighing a plan to prioritise gas supply to critical sectors if the disruption persists, three people aware of the matter said.
“The government is looking at multiple options to ensure uninterrupted supply of natural gas,” one of the persons said. “One of the options is reprioritising gas allocation across sectors. That will be looked at if need arises.” The disruption was triggered after QatarEnergy halted LNG production at its Ras Laffan liquefaction complex following attacks on facilities amid the ongoing conflict involving Iran, Israel and the United States.
The disruption is significant for India because Qatar is a cornerstone of its gas supply chain. According to data from the Petroleum Planning and Analysis Cell (PPAC), India imported $14.9 billion worth of natural gas in FY25, with Qatar accounting for roughly half of those imports.
Globally, the crisis has shaken energy markets as the Strait of Hormuz carries about 20% of global LNG supply and nearly one-third of seaborne crude oil exports. For India, the waterway is a transit route for around 57% of its LNG imports and about half of its crude oil supplies.
If the disruption persists, industry sources say India could face a supply squeeze lasting two to three weeks or longer.
Early signs of stress are already visible in industrial clusters. In Morbi, Gujarat, one of India’s largest ceramics manufacturing hubs, gas rationing has begun and factories are exploring propane as a temporary substitute to keep production lines running.
For sectors that rely heavily on imported gas, the consequences could be significant.
“Natural gas is the key feedstock for domestic urea production, accounting for around 80% of the raw material cost,” said Anuj Sethi, Senior Director at Crisil Ratings. “Further, the sector’s dependency on imported gas remains high with around 85% of gas consumed in the first nine months of FY26 met through imports, and 45–50% of the imported gas coming from the Middle East.” Gas is also a feedstock for the crackers that produce ethylene and propylene, which are processed into assorted plastic products.
Any prolonged disruption could therefore affect fertiliser output.
“At present, production losses for the fertiliser industry are likely to be limited due to available gas stocks,” said Anand Kulkarni, Director at Crisil Ratings. “However, a prolonged crisis can lead to gas supply issues. In that scenario, production will depend on sourcing gas from alternatives such as the US or Russia, or purchasing spot LNG at elevated prices.”
Higher gas costs could also increase the government’s fertiliser subsidy burden.
“The constrained natural gas supply from the Middle East is likely to result in elevated spot gas prices, which in turn might increase the subsidy bill as gas costs are passed through for urea manufacturers,” Kulkarni added.
India’s fertiliser supply chain itself is exposed to disruptions in the Gulf. According to the Global Trade Research Initiative (GTRI), India imported $3.7 billion worth of fertilisers from West Asia in 2025, including $2.2 billion of mixed fertilisers (NPK) and $1.5 billion of nitrogen fertilisers such as urea.
“Supply disruptions during the crop season could reduce fertiliser availability, increase government subsidy costs and push up food prices,” GTRI said.
City gas distribution companies — which supply CNG for vehicles and piped cooking gas to households — are also closely watching the situation.
While domestic piped gas and CNG supplies may remain largely protected due to priority allocation of domestic gas, the industrial segment could see the impact.
“City gas distribution is relatively protected as they receive priority allocation of domestic gas,” Sethi said. “However, gas supplied to industrial customers, which constitutes about 30% of the sector’s sales, may see a decline due to supply constraints.”
Gas-based power plants and energy-intensive industries such as ceramics, petrochemicals and glass manufacturing are also exposed. “Gas-based power generation plants and industrial clusters could face lower utilisation levels or temporary shutdowns if the shortage persists,” Sethi said.
India currently imports about 27 million tonnes of LNG annually, making it one of the world’s largest LNG consumers.
Experts say the current crisis highlights the need for a stronger long-term strategy to safeguard India’s gas supplies.
“In the short term, India should consider rationing gas and buying available spot cargoes,” said Sabarish Elango, Programme Lead at the Council on Energy, Environment and Water (CEEW). “In the longer term, India needs to develop strategic gas reserves and diversify LNG imports from countries such as the United States, Canada, Mozambique, Nigeria and Australia.”
Elango added that scaling up biogas, compressed biogas and green hydrogen could gradually reduce dependence on imported LNG and strengthen India’s energy security.
For now, however, a conflict thousands of kilometres away is beginning to ripple through India’s economy — threatening to affect everything from fertiliser output and factory production to fuel costs and household energy supplies if LNG disruptions persist.