|
Forecast Period
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2026-2030
|
|
Market Size (2024)
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USD 9.7 Billion
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Market Size (2030)
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USD 19.84 Billion
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CAGR (2025-2030)
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12.5%
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Fastest Growing Segment
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Domestically Supplied
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Largest Market
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South India
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Market Overview
The India
City Gas
Distribution Market was
valued at USD 9.7 Billion in 2024 and is expected to reach USD 19.84 Billion by
2030 with a CAGR of 12.5% during the forecast
period. The India City Gas Distribution (CGD) market is
primarily driven by government policies, rising demand for cleaner energy, and
urbanization. Initiatives like the Pradhan Mantri Urja Ganga project and
favorable licensing rounds have facilitated the expansion of natural gas
infrastructure across the country. As environmental concerns grow, natural gas
has become a preferred alternative to traditional fuels, supporting cleaner air
and reducing carbon emissions. Urbanization and industrialization in tier 2 and
tier 3 cities are increasing the demand for affordable and efficient energy
sources, with natural gas meeting both residential and industrial needs.
Additionally, the growing adoption of Compressed Natural Gas (CNG) vehicles,
supported by government subsidies and regulatory policies, is boosting demand
for city gas distribution. The expansion of pipeline infrastructure, along with
investments in LNG terminals, has made natural gas more accessible, further
supporting market growth. Public-private partnerships, especially involving
companies like GAIL and IOCL, have accelerated the development of CGD networks,
contributing to the transition towards a cleaner and more sustainable energy
system in India.
Key Market Drivers
Government Policies and Infrastructure Development
A significant driver of the City Gas Distribution
(CGD) market in India is the robust support from government policies aimed at expanding
the natural gas network across the country. The Indian government has laid out
a comprehensive framework for the development of CGD systems to meet the
growing energy demands while also focusing on cleaner fuel sources. One of the
key initiatives is the Pradhan Mantri Urja Ganga project, which aims to extend
the natural gas pipeline network to cities across eastern India, a region
previously underserved in terms of natural gas availability. Along with this,
the City Gas Distribution licensing rounds introduced by the Petroleum and
Natural Gas Regulatory Board (PNGRB) have made it easier for private and public
players to enter the market, facilitating the growth of CGD networks in new
regions. The government’s commitment to making natural gas a primary fuel
source is reflected in its goal to increase the share of natural gas in the
country’s energy mix from around 6-7% to 15% by 2030.
Furthermore, the push towards creating smart cities
in India has spurred demand for efficient and sustainable urban infrastructure,
where natural gas plays a pivotal role. The development of LNG terminals, as
well as the establishment of compressed natural gas (CNG) refueling stations,
has significantly enhanced the accessibility of natural gas for transportation
and residential purposes. The rise in infrastructure investments, both public
and private, ensures that the CGD network is both extensive and reliable,
providing a stable supply of natural gas to cities and towns. This
infrastructure expansion is expected to continue, driven by favorable
government incentives, regulations, and partnerships with private players such
as GAIL, IOCL, and Adani Gas, among others. Additionally, regulatory frameworks
such as the National Gas Grid and the approval of new CGD licenses by PNGRB
continue to accelerate market growth by opening up new areas for distribution,
especially in untapped regions, thus increasing the country’s reliance on
natural gas for both domestic consumption and industrial use.
Increasing Demand for Clean Energy and
Environmental Sustainability
Another major driver for the India City Gas
Distribution market is the increasing demand for clean and sustainable energy
solutions. As the country grapples with rising pollution levels, the Indian
government and consumers are gradually shifting towards cleaner fuels, with
natural gas emerging as a preferred option due to its lower carbon emissions
compared to coal, diesel, and petrol. The government’s long-term vision for a
cleaner energy future, articulated in its National Action Plan on Climate Change
(NAPCC) and various state-level policies, prioritizes the reduction of
greenhouse gas emissions, making natural gas an integral part of the energy
transition. This is further supported by initiatives like the promotion of CNG
(Compressed Natural Gas) vehicles, which are more eco-friendly than
conventional gasoline and diesel-powered vehicles. The adoption of CNG for
public transportation, especially in cities like Delhi, Mumbai, and Bengaluru,
is increasing rapidly as part of the drive to improve air quality and reduce
dependency on imported fuels.
Industries are also increasingly adopting natural
gas as a preferred fuel to meet sustainability targets and reduce emissions, as
it is cleaner and more efficient compared to coal or oil. In sectors such as
chemicals, textiles, and food processing, industries are switching to natural
gas for both their heating and energy needs. This shift is driven by stricter
environmental regulations and the need for cost-effective and energy-efficient
solutions. Furthermore, natural gas is being seen as a bridge fuel for India’s
transition to renewable energy, supporting the government’s goal of achieving
net-zero emissions by 2070. The growing consumer awareness about the
environmental impact of fuel choices is contributing to the increasing
preference for natural gas, particularly in urban areas where air quality
concerns are at the forefront. This push towards clean energy is not only
boosting demand for CGD systems in residential, industrial, and transportation
sectors but also making natural gas a key component of India’s sustainable
energy ecosystem. The market is set to continue growing as more consumers and
industries recognize the benefits of natural gas in achieving their
environmental goals.
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Key Market Challenges
Infrastructure and Supply Chain Challenges
One of the major challenges facing the City Gas
Distribution (CGD) market in India is the development and maintenance of a
robust and widespread natural gas infrastructure. While the government and
private companies have made significant investments in the natural gas pipeline
network, the sheer size and geographical diversity of India create logistical
and supply chain challenges. In many regions, especially in rural and remote
areas, the existing pipeline infrastructure is inadequate, and building new
pipelines requires substantial investment and time. Additionally, the terrain
and environmental conditions in some parts of the country can pose difficulties
in laying down pipelines, further delaying infrastructure expansion.
Even with the expansion of the National Gas Grid
and the ongoing Pradhan Mantri Urja Ganga project, the pace of infrastructure
development has often been slower than needed to meet the rising demand for
natural gas. This is compounded by issues such as land acquisition, local
resistance, and regulatory hurdles, which can further delay pipeline projects
and distribution network rollouts. In some urban areas, congestion and space
constraints make it difficult to implement an efficient CGD system, which limits
the potential for expanding natural gas access in densely populated regions.
Furthermore, while investments are being made in
LNG terminals and CNG stations, there is still a gap between the supply and
demand for liquefied natural gas (LNG) at these facilities. The infrastructure
required for storing, transporting, and distributing natural gas needs to be
significantly upgraded to meet the increasing demand from residential,
industrial, and transportation sectors. Developing a reliable supply chain to
ensure the uninterrupted flow of natural gas from terminals to end-users remains
a challenge, especially in smaller cities and towns that are yet to be
integrated into the national pipeline network. Until this infrastructure is
fully developed, the CGD market’s growth will be constrained, as availability
and accessibility will continue to be limiting factors for both consumers and
businesses.
Price Volatility and Regulatory Uncertainties
The CGD market in India also faces significant
challenges related to price volatility and regulatory uncertainties. While
natural gas is a cleaner and more affordable fuel compared to coal or oil, its
price is highly dependent on global supply-demand dynamics and international
energy markets. This makes natural gas prices subject to fluctuations,
particularly when global energy markets are volatile. The price of liquefied
natural gas (LNG), which India imports to meet its growing demand, can vary
significantly depending on geopolitical tensions, currency fluctuations, and
the supply-demand balance in global markets. These price fluctuations often
make it difficult for both consumers and companies to predict fuel costs,
impacting the overall affordability and attractiveness of natural gas as a
long-term energy solution.
Moreover, the CGD market is also impacted by
regulatory uncertainties. While the government has made strides in regulating
the sector, the regulatory framework for city gas distribution is still
evolving. Changes in government policies, such as tax structures, subsidies,
and pricing regulations, can create challenges for both private players and
consumers. The Petroleum and Natural Gas Regulatory Board (PNGRB) has
implemented licensing rounds and distribution network plans, but regulatory
delays and policy changes can disrupt the market and affect investment
confidence. For example, changes in the pricing structure of natural gas or
alterations in the allocation of gas resources for CGD networks could impact
the profitability and sustainability of CGD operators.
Additionally, the limited number of players and
intense competition for licenses in the CGD sector can lead to pricing
pressures, especially in markets where demand is high and infrastructure
development is ongoing. While the government’s focus on increasing natural gas
consumption remains a priority, the financial stability of CGD companies is
challenged by cost and price volatility, making it difficult to maintain stable
profit margins. Regulatory uncertainties combined with global price
fluctuations thus pose significant risks for stakeholders in the CGD market,
making it imperative for both businesses and regulators to work together to
create a stable and predictable environment for long-term investment and
growth.
Key Market Trends
Increasing Adoption of Compressed Natural Gas (CNG)
for Transportation
One of the most prominent trends in India’s City
Gas Distribution (CGD) market is the growing adoption of Compressed Natural Gas
(CNG) as a fuel alternative in the transportation sector. This shift is largely
driven by rising concerns over air pollution, particularly in urban centers,
and the government’s aggressive push to reduce emissions by promoting cleaner
fuels. CNG is emerging as a preferred option for public transport, including
buses, auto-rickshaws, and taxis, due to its cost-effectiveness and significantly
lower emissions compared to conventional fuels like petrol and diesel. The
Indian government has launched various initiatives to promote CNG usage,
including the establishment of CNG refueling stations across cities and
offering incentives for converting vehicles to CNG.
The Delhi-National Capital Region (NCR), one of the
most polluted regions in the world, has been at the forefront of this
transition, with the introduction of CNG buses in public transport fleets, and
policies that encourage the use of CNG for private vehicles. Other cities,
including Mumbai, Bengaluru, and Ahmedabad, have also rapidly adopted CNG
vehicles, resulting in a significant reduction in vehicular emissions. This
trend is expected to expand further as cities across the country continue to
face air quality issues, and CNG becomes more readily available through
expanding CGD networks. As the infrastructure for CNG refueling stations grows,
the demand for CNG vehicles will rise, creating a stronger market for CGD
companies to serve both the transportation sector and households with natural
gas for cooking and heating.
In addition, India’s push to reduce its dependency
on imported oil and gas is another motivator behind the adoption of CNG. The
cost-effectiveness of CNG compared to petrol and diesel makes it a more
attractive option for consumers, especially with volatile international fuel
prices. With a growing number of vehicles shifting to CNG, the Indian Oil
Corporation (IOC), GAIL, and other stakeholders are making substantial
investments in the infrastructure for CNG supply, such as fueling stations and
distribution pipelines, further accelerating this trend. This shift towards
cleaner, more sustainable energy sources aligns with the broader goals of
India’s energy transition, as the country aims to meet its carbon reduction
targets while enhancing energy security.
Expansion of Natural Gas Infrastructure in Tier-2
and Tier-3 Cities
Another key trend in the India CGD market is the
rapid expansion of natural gas infrastructure into tier-2 and tier-3 cities,
which were historically underserved or overlooked in terms of city gas
networks. Until recently, India’s CGD networks were primarily concentrated in
large metropolitan areas, such as Delhi, Mumbai, and Chennai. However, as the
government accelerates its push for clean energy adoption and regional economic
growth, smaller cities and towns are becoming a focus for new city gas distribution
projects. This shift is driven by the expansion of the Pradhan Mantri Urja
Ganga initiative and other government-backed projects aimed at increasing
natural gas accessibility across India.
The rise in urbanization, coupled with growing
industrialization in smaller cities, has increased the demand for reliable,
cleaner energy sources. Industries, including textiles, chemicals, food
processing, and manufacturing, are increasingly seeking natural gas as a
cheaper and more efficient alternative to traditional fuels like coal and oil.
Natural gas offers these industries an opportunity to meet environmental
regulations and reduce their carbon footprints, which is becoming increasingly
important in light of India’s environmental goals and global commitments. The
availability of natural gas in these emerging markets also promotes energy
security, as cities and towns are less dependent on external fuel imports.
For households, expanding the CGD network into
tier-2 and tier-3 cities is providing residents with an affordable and
environmentally friendly fuel option for cooking and heating. Historically,
these areas have relied heavily on LPG (liquefied petroleum gas) cylinders,
which are more expensive and logistically challenging to supply, especially in
remote areas. The availability of piped natural gas (PNG) is making a
significant impact on convenience, cost, and safety for consumers in these
regions. Additionally, the expanding network of CNG refueling stations in
smaller cities is further driving the adoption of natural gas-powered vehicles,
especially as local governments implement stricter emission standards and
encourage cleaner alternatives to petrol and diesel.
The expansion of CGD infrastructure to these
regions is supported by increasing private sector investment and the increasing
role of companies like GAIL, IOCL, Adani Gas, and others that are bidding for
licenses to serve new areas. This trend is expected to accelerate as the
government continues to promote natural gas usage and invest in the necessary
infrastructure. The broader availability of natural gas will help these cities
meet their growing energy needs while simultaneously addressing environmental concerns,
boosting the CGD market's growth potential.
Segmental Insights
End-User Insights
Industrial segment dominates in the India City Gas Distribution market,
The industrial segment is a dominant force in the India City Gas Distribution
(CGD) market, driven by the increasing adoption of natural gas as a cleaner,
cost-effective, and reliable energy source. Industrial sectors such as
chemicals, textiles, food processing, and manufacturing are increasingly
turning to natural gas to meet their energy demands while complying with
stringent environmental regulations. Natural gas offers significant benefits
over traditional fuels like coal and oil, including lower emissions, higher
efficiency, and reduced operating costs. As India strives to reduce its carbon
footprint and meet global climate targets, industries are prioritizing cleaner
energy alternatives, and natural gas is emerging as the fuel of choice.
The industrial sector's demand for city gas
distribution is further fueled by the government’s push to expand natural gas
infrastructure and promote its use in industrial applications. The
accessibility of natural gas through CGD networks has made it more feasible for
industries, even in tier-2 and tier-3 cities, to switch to a cleaner fuel
option. Moreover, the availability of natural gas for combined heat and power
(CHP) applications, which are increasingly being adopted in industries for more
efficient energy use, further drives the industrial segment’s dominance in the
CGD market. As industries continue to embrace sustainability goals, the
industrial segment is expected to remain the primary growth driver in the India
CGD market.
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Regional Insights
South India dominates the India City Gas
Distribution market, in 2024, South India dominates the India City Gas Distribution
(CGD) market due to its well-established infrastructure, progressive government
policies, and growing industrial and residential demand for cleaner energy.
States like Tamil Nadu, Andhra Pradesh, Karnataka, and Telangana have been at
the forefront of adopting natural gas for both residential and industrial use.
The region has seen a significant expansion in the availability of piped
natural gas (PNG) for households and compressed natural gas (CNG) for
transportation, which has been a key factor in driving the CGD market's growth.
South India's major urban centers, such as Chennai, Bengaluru, and Hyderabad,
have robust CGD networks, and their continuous urbanization further boosts the
demand for natural gas as a cleaner, more affordable alternative to traditional
fuels.
The industrial growth in South India, especially in
sectors like chemicals, textiles, and automobiles, is another critical driver.
Industries in this region are increasingly adopting natural gas for energy
efficiency and to meet stringent environmental regulations. The government's
proactive stance, through initiatives like the Pradhan Mantri Urja Ganga
project and favorable regulatory frameworks, has also accelerated the expansion
of natural gas infrastructure, enabling better coverage and service. As a result,
South India remains a key contributor to the overall growth of the CGD market
in India, setting trends in cleaner energy adoption and infrastructure
development.
Recent Developments
- June 2024: The Petroleum and Natural Gas Regulatory
Board (PNGRB) hosted a Roundtable Discussion with stakeholders to assess the
current landscape of PNG Stoves and Retrofitted LPG Stoves. As dependence on
natural gas grows, the board, alongside academic research institutions, CGD entities,
and stove manufacturers, explored the adoption of highly efficient domestic PNG
stoves.
- April 2024: A Japanese consortium revealed its
plans to invest USD 370 million in a company led by ISquared Capital, a global
infrastructure investor. The consortium aims to focus on investing in India’s
city gas distribution network.
Key
Market Players
- Gujarat
Gas Limited (GGCL)
- Indraprastha Gas Limited
(IGL)
- GAIL Gas Limited
- Mahanagar Gas Limited (MGL)
- Adani Gas Limited
- Maharashtra Natural Gas
Limited (MNGL)
- Central U.P. Gas Limited
(CUGL)
- Bhagyanagar Gas Limited
(BGL)
- Tripura Natural Gas Company
Limited (TNGCL)
- Sabarmati Gas Limited (SGL)
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|
|
|
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- Compressed City
Gas Distribution
- Piped City
Gas Distribution
- Liquified
Petroleum Gas
|
- Domestically
Supplied
- International
Pipeline Trade
|
- Industrial
- Residential
- Commercial
- Automotive
|
- North India
- South India
- West India
- East India
|
Report Scope:
In this report, the India City Gas Distribution
Market has been segmented into the following categories, in addition to the
industry trends which have also been detailed below:
- India City Gas Distribution
Market, By Type:
o Compressed City Gas
Distribution
o Piped City Gas
Distribution
o Liquified Petroleum Gas
- India City Gas Distribution
Market, By Source of Supply:
o Domestically Supplied
o International Pipeline
Trade
- India City Gas Distribution
Market, By End User:
o Industrial
o Residential
o Commercial
o Automotive
- India City Gas Distribution
Market, By Region:
o North India
o South India
o West India
o East India
Competitive Landscape
Company Profiles: Detailed analysis of the major companies
present in the India City Gas Distribution Market.
Available Customizations:
India City Gas Distribution Market report
with the given market data, Tech Sci Research offers customizations according
to a company's specific needs. The following customization options are
available for the report:
Company Information
- Detailed analysis and profiling
of additional market players (up to five).
India City Gas Distribution Market is an upcoming
report to be released soon. If you wish an early delivery of this report or
want to confirm the date of release, please contact us at [email protected]