India Mulls Gas Levies to Fund $42 Bn Strategic Reserves

India is planning to introduce levies on liquefied petroleum gas (LPG) and natural gas consumers to fund its proposed $42 billion strategic fuel reserve programme. The plan, under discussion at the Ministry of Petroleum and Natural Gas, aims to raise about $1.5 billion annually to build storage infrastructure for crude oil, liquefied natural gas (LNG), and LPG over the next decade.

The proposal marks a significant expansion of India's strategic energy security framework, extending emergency reserves beyond crude oil for the first time. The move follows supply disruptions during the Iran conflict that exposed vulnerabilities in India's dependence on imported fuels and key shipping routes.

The proposed consumer levy would add around Rs 18 to the price of a standard domestic cooking gas cylinder, while the natural gas charge would be passed on to users of piped gas and industrial consumers if implemented. The total yearly collections from the levies could reach roughly $1.5 billion, with LPG generating about $460 million annually and natural gas contributing around $1 billion.