India's dependence on the Strait of Hormuz for its cooking gas supply became a national policy problem the moment the Iran conflict closed that waterway. Roughly 90 percent of the country's LPG imports move through the strait, and the blockage forced a policy response that is now becoming a structural change in how the country manages domestic energy security.
The government has set maximum LPG production targets for both state-owned refineries and private operators in response to the disruption, with production schedules subject to reassessment every six months as import conditions, inventory levels and consumption trends evolve. Reliance Industries, which runs the Jamnagar complex on India's western coast, received the largest individual target allocation. The framework requires every covered company to maintain adequate infrastructure for storage and transport, not merely to hit a production number.
The production response during the acute phase of the Hormuz blockage shows what Indian refineries can do when directed to act. Within eight days of the disruption, refineries were instructed to maximize LPG output by diverting propane, butane and associated refinery streams. Daily domestic production rose from around 35,000 tonnes to nearly 54,000 tonnes—a gain of more than 54 percent and enough to exceed the supply gap created by the import halt.
Reliance alone tripled LPG output at Jamnagar during the crisis period. That single facility's response accounts for a large portion of the national production increase, which illustrates both the concentration of India's refining capacity in private hands and the leverage the government holds over Reliance's output decisions through production mandates.
The government has structured the new framework with a six-month review cycle. Every half-year, production schedules will be reassessed against import conditions, domestic inventory levels and consumption trends. That cadence is deliberate—it keeps the targets flexible enough to adjust if Hormuz reopens fully and import flows normalize, but short enough to respond if the geopolitical situation deteriorates again.
India has already secured adequate crude oil and LPG supplies through Aug. easing near-term availability concerns after the Strait of Hormuz reopened and Gulf energy flows resumed. But the policy architecture being built now is not designed for August—it is designed for the next closure, whenever that occurs.
The numbers behind India's LPG import exposure explain the urgency. National LPG output reached 46,000 tonnes per day as refiners moved to cover the import shortfall, up 25 percent from the baseline rate of around 35,000 tonnes before the Hormuz disruption began. The peak of 54,000 tonnes per day, reached at the height of the emergency ramp-up, represents the ceiling refineries can approach when every available propane and butane stream is redirected to LPG production.
The counterargument to the production-target approach is that it distorts refinery economics. When a refinery diverts propane and butane streams to LPG rather than to petrochemical feedstocks or fuel blending, it forgoes higher-margin products. Reliance's Jamnagar complex is an integrated refining and petrochemical operation—tripling LPG output almost certainly compressed margins elsewhere in the processing chain. The six-month review cycle may be partly an acknowledgment that sustained maximum-production mandates carry an economic cost that needs periodic recalibration.
The infrastructure requirement built into the mandate addresses a second structural weakness the crisis exposed. Production targets are irrelevant if storage and distribution capacity cannot absorb and move the additional output. The government's directive that companies maintain adequate LPG storage and transport infrastructure makes the mandate self-reinforcing: refineries must build the logistics backbone to support the volumes they are required to produce.
India's LPG consumption is predominantly residential. The fuel powers cooking stoves for hundreds of millions of households, and supply disruptions carry direct political consequences. The government's willingness to issue production directives to private operators including Reliance reflects how seriously policymakers treated the Hormuz-driven supply gap—this was not a market signal, it was a command.
The policy also tests the limits of domestic refining as a substitute for imports. Even at the emergency peak of 54,000 tonnes per day, India was supplementing rather than replacing import volumes entirely. The Hormuz closure was temporary; a prolonged closure would require either deeper cuts to petrochemical output to free up more LPG feedstock or demand rationing on the consumption side. The six-month review framework does not resolve that constraint—it only ensures the government has current data when deciding how hard to push production.
