Disruptions to energy shipments through the Strait of Hormuz have prompted India to prioritise household and transport gas supplies, leaving restaurants and other businesses scrambling for fuel.
Half of the six eateries run by Delhi restaurateur Zachariah Jacob are close to running on fumes.
“Right now, we are running on existing LPG (liquefied petroleum gas) cylinders. We have enough stock for about a week,” Jacob, 38, who operates the outlets under the Mahabelly brand, told CNA.
“After that, we will run out of gas, and we don’t know what to do.”
The difference lies in how his kitchens are fuelled. Three of Jacob’s outlets in malls are cushioned by piped natural gas (PNG) connections, which remain unaffected.
But his standalone kitchens rely on commercial LPG cylinders, and supplies have abruptly dried up as disruptions to shipments through the Strait of Hormuz – a key artery for India’s energy imports – ripple through the country’s fuel supply chains amid the war in the Middle East.
The government has tightened distribution to prioritise households and other critical sectors, leaving many businesses scrambling to secure supplies and fuelling the black market.
Experts say the turmoil is exposing immediate economic risks in India. It is also raising deeper questions about the country’s energy resilience – how to manage short-term shortages without crippling livelihoods, and how to reduce long-term dependence on vulnerable supply routes.
BRACING FOR DISRUPTION
The Strait of Hormuz is a critical artery for India’s energy supplies. Tensions following the United States and Israel’s strikes on Iran on Feb 28 have disrupted the route and triggered volatility in global oil prices.
In 2025, nearly half of India’s crude oil and LNG imports transited through the Strait of Hormuz, according to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).
However, the Indian government said on Wednesday (Mar 11) that diversification efforts have reduced dependence, with about 70 per cent of crude oil imports now sourced from outside the strait.
LPG remains more exposed. India imports around 60 per cent of its LPG consumption, and roughly 90 per cent of those imports pass through the Strait of Hormuz, government data shows.
Against this backdrop, India has moved to manage its domestic supply.
In an order issued on Tuesday (Mar 10), the Ministry of Petroleum said LPG supplies would be prioritised for households, the transport sector and LPG cylinder production.
“We are committed to ensuring uninterrupted supply of affordable energy to our domestic consumers,” Petroleum Minister Hardeep Singh Puri said in a social media post, adding there was “no reason to panic”.
Other sectors, including fertiliser plants and the tea industry, will receive only 70 to 80 per cent of their requirements, “subject to operational availability”, the ministry said. Supplies to petrochemical facilities and power plants would be fully or partially curtailed to bridge the gap.
The new rules would ensure equitable distribution and continued availability for “priority sectors” such as healthcare and education, it added.
But restaurants and hotels, which are not on the priority list, have warned that the commercial fallout could be severe.
Zorawar Kalra, vice president of the National Restaurant Association of India (NRAI), said the industry is part of a 6.6 trillion rupee (US$71.5 billion) ecosystem, generating about 18 billion rupees in economic activity each day.
Commercial establishments account for about 13 per cent of India’s LPG consumption, he highlighted.
“Even if 25 per cent of outlets linked to PNG remain operational, a widespread shutdown of LPG-dependent restaurants could result in daily losses of over 12 billion rupees,” Kalra told CNA.
The association has written to the government urging it to designate restaurants – both dine-in and delivery – as an essential service, which would grant them priority access to commercial LPG cylinders.
“If they shut down for even a single day, that’s a loss to the economy,” Kalra said. “We are the second-largest employer after agriculture – 8 million directly employed, and another 8 million in ancillary industries.”
The NRAI warned on Tuesday that 50 to 60 per cent of restaurants in India could shut within the next two to three days if commercial LPG supplies are not restored, in remarks carried by local media.
Restaurants are already planning contingencies, including trimming menus and seeking alternative cooking methods.
Some eateries in parts of India are already switching to traditional coal-fired ovens, according to local reports.
“If we don’t have gas, maybe instead of doing 50 items, we do five,” said Jacob, the Delhi restaurant owner, adding that his team is considering shifting some cooking to induction or electric equipment as a stopgap measure.
However, coal-fired cooking is restricted in Delhi due to air pollution regulations, Jacob said. “If you’re looking at coal, that’s also not something you can really depend on.”
In some areas, black-market cylinders are being sold at inflated prices. Many restaurateurs said they are reluctant to buy at “insane prices” and pass the temporary spike on to customers, according to local reports.
Beyond hospitality and the food and beverage industry, small manufacturing units that rely on LPG for heating and processing – from food processing and textiles to metals, ceramics and even pharmaceuticals – could see operations slow or halt, said Karthik Nachiappan, a research fellow at the National University of Singapore’s Institute of South Asian Studies (ISAS).
“Big businesses have other kinds of fuels (they can) rely on, and they have LPG that they can store. Most small businesses don’t have that, so they need to replenish their stock every couple of days,” he told CNA, adding that this makes them especially vulnerable.
EMERGENCY MEASURES, STRUCTURAL FIXES
India has moved to shore up supplies.
On Wednesday, the government said it had increased domestic LPG production by about 25 per cent and was exploring alternative supply routes to the Strait of Hormuz.
But experts cautioned that such measures may not offer immediate relief, as it will still take time to plug the current supply constraints.
In the near term, the government may need to increase emergency imports from countries like Canada and the US, as well as release buffer stocks held at import terminals and bottling plants to stabilise distribution, Nachiappan said.
The LPG gas crunch also underscores the need for structural reforms, analysts said.
They pointed to how greater diversification of supply routes and expanded storage capacity could buffer against chokepoint disruptions such as the Strait of Hormuz.
In the longer term, India must diversify suppliers beyond the Middle East, Nachiappan said, pointing to options including the United States, Canada, Africa and Southeast Asia.
India had already been taking action on this front prior to the Middle East conflict.
In November 2025, Indian state-owned refineries signed a long-term agreement to import 2.2 million tonnes of LPG from the US in 2026, Bloomberg reported. The deal was expected to raise the US share of India’s LPG supply to nearly 10 per cent in 2026, up from just 0.6 per cent in 2024.
India has also stepped up LPG imports from Norway, Algeria, Australia and Canada, while Japanese suppliers – traditionally serving Indonesia, the Philippines and Thailand – have expanded LPG shipments to the Indian market.
Investments in storage, logistics and bottling infrastructure would help build domestic buffer capacity against future shocks, analysts said.
NRAI’s Kalra said expanding PNG infrastructure beyond malls and major urban clusters could also reduce dependence on cylinder-based LPG in smaller cities and towns, where he believes the impact may be worse due to weaker logistics and bargaining power.