India's Gas Demand Growth Hobbled by Infrastructure Bottlenecks

India's gas demand growth is hampered by underinvestment in midstream infrastructure and restrictive pricing mechanisms, according to a recent report.

The country has expanded regasification terminal capacity significantly, but investment in midstream infrastructure has not kept pace, limiting the ability to increase gas consumption. To unlock sustained growth, reforms to pricing mechanisms and market access are essential.

The Strait of Hormuz crisis highlighted India's reliance on Gulf-sourced LPGs and LNG imports from countries like Qatar, Australia, the US, and Russia. The country relies heavily on these imports, with domestic gas output meeting only around 50-52% of demand.

A wave of new LNG export capacity is expected to come online in the coming years, potentially putting downward pressure on prices. However, India will need to enable buyers to respond effectively to short-term price opportunities through further liberalization of terminal capacity bookings and system entry charges.