India's Gas Growth Hinges on Reforms, Infrastructure, and Market Design

India's long-term natural gas growth is at risk due to lagging investment in midstream infrastructure and outdated market design, according to a new report by the International Gas Union (IGU). The Strait of Hormuz crisis has exposed India's vulnerability to disruptions in gas supply chains, particularly from Gulf-sourced LPGs and LNG. Despite significant expansion of regasification terminal capacity, India remains heavily dependent on imports to meet its natural gas and LPG requirements.

The country currently meets around 50-52% of its demand through domestic gas output, while the balance is met through imports from Qatar, Australia, the US, and Russia. The report highlights that even more pronounced dependence exists in liquefied petroleum gas (LPG), with India importing around 60-65% of its requirement.

To unlock the next phase of growth, the IGU emphasizes the need for reforms to market design, regulation, and pricing mechanisms. Further liberalization of LNG terminal capacity bookings and system entry charges is also necessary to enable buyers to respond effectively to short-term price opportunities. The report also stresses that gas will struggle to compete with coal unless transmission infrastructure expands significantly.