India’s LPG Crisis Forces 330 Million Households Back to Firewood as Iran War Disrupts Clean Energy Push
Strait of Hormuz closure triggers energy poverty cascade, reversing decade of climate progress and threatening India's NDC targets.
India’s dependence on liquefied petroleum gas imports transiting the Strait of Hormuz has forced over 330 million households into an energy poverty regression, with rural families returning to firewood and cow dung cakes after a decade-long push toward clean cooking fuels. The Iran-Israel war’s effective closure of the strait — through which 90% of India’s LPG imports flow — has created acute shortages across the subcontinent, exposing the fragility of emerging market energy transitions when geopolitical shocks override decarbonization imperatives.
The Carbon-Backward Shift
In Jalgaon, Maharashtra, firewood sales have surged from 3,000 kilograms daily to 35,000 kilograms, while demand for cow dung cakes has risen sharply as households scramble for cooking alternatives, according to the Free Press Journal. The regression directly contradicts the Pradhan Mantri Ujjwala Yojana, launched in 2016 to eliminate traditional biomass cooking — a programme that had reached 104.29 million beneficiaries by January 2026.
The government’s response has formalised the retreat. Between 9-12 March, pollution control boards received directives to permit biomass pellets, refuse-derived fuel, kerosene, and coal for the hospitality sector for one month, per ThePrint. The allowance marks a policy reversal of the government’s decade-long campaign to phase out traditional fuels, previously linked to health risks for women and environmental degradation.
“For PMUY beneficiaries in rural Rajasthan, families in the plains of Bihar, first-generation LPG users in tribal Jharkhand, the crisis is disproportionately cruel. They are least equipped to absorb sudden price spikes, least likely to have alternative cooking equipment, and most likely to revert to biomass fuels whose health costs are invisible but very real.”
— Analysis, Story of Souls
One study estimates household air pollution from solid-fuel cooking contributes to over 600,000 premature deaths annually in India, according to reporting by Story of Souls. The return to biomass threatens to reverse public health gains alongside climate progress.
Supply Chain Arithmetic
India imports approximately 2.192 million tonnes of LPG monthly — 60% of total consumption — with the overwhelming majority transiting the Strait of Hormuz, CNBC reported. The country maintains only 1.9 million tonnes of storage capacity, equivalent to 22 days of supply at current consumption rates.
Domestic production covers 40% of demand. Even if refineries increase LPG output by 10-20% above current levels, domestic supply would only rise to 47-50% of total demand, leaving a structural gap that must be filled through imports, according to Sumit Ritolia, lead analyst at Kpler, cited by ThePrint.
The Pradhan Mantri Ujjwala Yojana, launched in May 2016, aimed to provide free LPG connections to women from below-poverty-line households. By January 2026, the scheme had enrolled 104.29 million beneficiaries out of 332.1 million total domestic connections. The programme was central to India’s Nationally Determined Contribution under the Paris Agreement, which commits to a 45% reduction in emissions intensity by 2030 from 2005 levels and 50% non-fossil capacity by the same deadline.
The Observer Research Foundation notes that India’s 332.1 million active LPG connections represent one of the world’s largest clean cooking transitions — now threatened by a single chokepoint’s closure.
Price Dislocations and Inflation Pressure
Black market LPG cylinder prices have reached ₹3,000-₹4,000 for 19-kilogram commercial cylinders versus the official ₹2,100, while some 14.2-kilogram domestic cylinders have sold for ₹2,300 in informal markets. Official PMUY beneficiary pricing stands at ₹613 per cylinder in Delhi, with non-subsidised rates at ₹913 — up ₹60 from 7 March, per the Ministry of Petroleum and Natural Gas.
Citi estimates 50-75 basis points of upward risk to India’s Inflation forecast of 4% for fiscal year 2026-27, while Nomura has raised its inflation projection to 4.5% from 3.8%, CNBC reported. The macro pressure compounds the human cost: residents have queued outside gas agencies as early as 3 a.m., with some facing delays of 25 days for refills.
- India’s NDC commits to 45% emissions intensity reduction by 2030 — baseline threatens regression
- 600,000 annual premature deaths linked to solid-fuel cooking air pollution
- 104.29 million PMUY households most vulnerable to biomass reversion
- Government authorisation of coal and biomass contradicts decade of clean-cooking policy
Industrial Rationing Cascades
Gujarat Gas reduced daily gas supply to the ceramic cluster by 50% for 6-31 March, while Gujarat State Petroleum Corporation cut industrial supply by 70%, according to Argus Media. The rationing prioritises residential consumption but threatens manufacturing output and employment.
Sagar Daryani, president of the National Restaurant Association of India, warned that “this is a crisis situation that will lead to the closure of many restaurants over the next few days,” per CNBC. Commercial establishments have shifted to induction stoves and firewood where LPG remains unavailable.
Geopolitical Energy Security
Nikhil Bhandari of Goldman Sachs noted that “India needs more oil and gas. The country is highly dependent on supplies from the Strait of Hormuz and has a much lower inventory cushion than other north Asian markets.” The structural vulnerability reflects limited diversification: roughly 90% of LPG imports transit a single maritime chokepoint now effectively closed for the first time in commercial shipping history.
The Business Today analysis frames the crisis as “The Ras Laffan Effect” — referencing the Qatar LNG hub attack — noting that 90% of India’s LPG originates from West Asia, creating systemic exposure to regional conflict.
What to Watch
The duration of Strait of Hormuz disruptions will determine whether India’s biomass regression becomes structural or temporary. If commercial shipping remains blocked beyond March, domestic refinery expansion — currently targeting 28% production increases per the Ministry of Petroleum — will prove insufficient to close the 50-60% import dependency gap. Watch for PMUY beneficiary dropout rates as subsidised cylinder prices rise and availability deteriorates. Industrial gas rationing in Gujarat signals potential manufacturing output contraction, with knock-on employment effects that could compound inflation pressure beyond Citi’s 50-75 basis point estimate. India’s ability to meet its 2030 NDC targets now depends partly on geopolitical factors beyond policy control — a climate vulnerability that extends to every emerging market with concentrated energy import dependencies. The 600,000 annual premature deaths linked to solid-fuel cooking represent a baseline that could rise significantly if the biomass shift persists beyond the current one-month emergency authorisation window.