LPG Cylinder Price : Change in Domestic LPG Subsidy Formula? Possibility of Gas Cylinder Price Increase

There is a possibility of a change in the prices of domestic gas cylinders, i.e., LPG, soon. After state-owned oil companies signed an annual supply agreement with American exporters last month, discussions have begun that the central government is considering changing the formula for LPG subsidy. Currently, the subsidy on LPG is based on the Saudi Contract Price (Saudi CP), which is considered the standard for LPG supply in West Asia.

However, now Indian Oil, Bharat Petroleum, and Hindustan Petroleum, these government oil companies, are insisting on including the US Benchmark Price and the additional logistics costs in transatlantic shipments in the subsidy calculation. It is said that the transportation cost of LPG coming from the US is about four times higher compared to Saudi Arabia. If sufficient price concessions are obtained on American supply compared to the Saudi CP, only then will this LPG be economical for India; otherwise, the companies are likely to incur more losses.

Last month, for the contract year 2026, Indian Oil, BPCL, and HPCL signed a one-year contract to import approximately 2.2 million metric tons of LPG annually from the United States. This amount is about 10 percent of India's total annual LPG imports. The government controls the prices of LPG sold for domestic use. If oil companies incur losses due to sales at prices lower than market rates, the government compensates for it.

According to experts, if the expected discount on American supply is not received, the government may have to opt for reducing the subsidy on LPG. This could directly affect ordinary consumers as well as beneficiaries of the Ujjwala scheme. In other words, the possibility of domestic LPG cylinders becoming more expensive in the near future cannot be ruled out.

Currently, the price of a subsidized domestic gas cylinder in Delhi is 853 rupees, while the price of a commercial cylinder is 1,580.50 rupees. The last change in domestic gas prices was on April 8, 2025, when there was an increase of 50 rupees. Currently, a subsidy of 300 rupees per cylinder is given under the Ujjwala scheme. As of December 1, 2025, there are 103.5 million Ujjwala beneficiaries, with an addition of 2.5 million in the current financial year. Since the total number of LPG users in the country is approximately 330 million, any change in the subsidy could affect millions of consumers.