India Considers Levy on Cooking Gas Users to Fund Strategic Fuel Reserve

The Indian government is considering imposing a small levy on liquefied petroleum gas (LPG) and natural gas users to help fund a planned $42 billion strategic fuel reserve programme. The proposal aims to address India's vulnerability to global fuel supply shocks, particularly after disruptions during the Iran conflict exposed its dependence on imported fuel.

The Petroleum Ministry is reportedly considering a levy of ₹1.29 per kg of LPG, which would increase the cost of a standard domestic cooking gas cylinder by about ₹18. For natural gas, the ministry has proposed a levy of ₹1.43 per standard cubic metre. These levies are expected to generate around $460 million and $1 billion annually, respectively.

The proposed strategic reserve programme is expected to cost about $42 billion over the next decade, with more than half spent on building storage infrastructure. The plan envisages fuel stockpiles sufficient to meet around two months of India's crude oil and LNG demand and about six weeks of LPG consumption.