The Indian government has greenlit a new incentive scheme designed to significantly increase the number of domestic piped natural gas (PNG) connections across the country. Starting September 1, 2026, the 'Incentive Scheme for Promotion of Domestic PNG Connections' will offer city gas distribution (CGD) companies additional allocations of cheaper, domestically produced APM gas.
Accelerating PNG Adoption
Under the new scheme, CGD companies will receive an additional 200 standard cubic metres of APM gas for every new billed domestic PNG connection established above a pre-determined threshold for their operational area. This move is expected to incentivize companies to convert inactive or unbilled connections into active, paying customers, and to expand pipeline networks into new residential areas.
The Centre's decision comes as India faces challenges with fuel shipments and increased import costs, partly due to international conflicts. India, being the world's second-largest liquefied petroleum gas (LPG) importer, relies on imports for approximately 60% of its LPG requirements. In 2025, the nation imported around 22 million metric tonnes of LPG, primarily from the Middle East, at a cost of nearly $12 billion. The scheme is a strategic effort to reduce this dependency on LPG imports and associated subsidy spending.
Economic and Environmental Benefits
The additional domestic gas allocation will replace more expensive imported liquefied natural gas (LNG) currently used by CGD companies for their Compressed Natural Gas (CNG) transport segments. This shift is projected to lower overall gas-sourcing costs for distributors. The government estimates these savings could dramatically reduce the payback period for investments in domestic PNG infrastructure from about ten years to roughly three years.
Beyond the economic advantages, PNG offers several benefits for household users. Supplied through underground pipelines, it eliminates the need for storing or replacing cylinders, providing a continuous supply with billing based on actual consumption. PNG is also lighter than air, dispersing quickly in the event of a leak, and is a cleaner-burning fuel, contributing to improved indoor air quality and reduced carbon emissions.
Current Landscape and Future Goals
As of July 1, India had approximately 17.4 million domestic PNG connections, a stark contrast to the roughly 331.4 million active household LPG customers. Companies like Indraprastha Gas, Mahanagar Gas, GAIL Gas, and Bharat Petroleum Corp have previously offered incentives, such as reduced installation charges, to promote piped gas connections. This new government scheme, implemented in two six-month tranches, aims to further accelerate this transition, bringing more households into the fold of a more sustainable and convenient cooking fuel source.