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Forecast Period
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2026-2030
|
|
Market Size (2024)
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USD 16.9 Billion
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Market Size (2030)
|
USD 27.36 Billion
|
|
CAGR (2025-2030)
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8.2%
|
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Fastest Growing Segment
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Industrial
|
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Largest Market
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South India
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Market Overview
The India
Natural
Gas Market was
valued at USD 16.9 Billion in 2024 and is expected to reach USD 27.36 Billion by
2030 with a CAGR of 8.2% during the forecast period. The India natural gas market is driven by several
key factors. Rapid economic growth and increasing energy demand are propelling
the need for cleaner energy sources, with natural gas seen as a key solution.
Government policies, such as the Pradhan Mantri Urja Ganga project, aim to
expand pipeline infrastructure, while incentives for LNG terminals support
growth. Environmental concerns and the push for a cleaner energy mix are
further accelerating natural gas adoption, especially in sectors like power generation
and transportation. The growing urban population increases demand for natural
gas in residential, commercial, and industrial sectors, particularly in cleaner
transportation options like CNG vehicles. Infrastructure development, including
the expansion of gas pipelines and LNG terminals, improves accessibility and
supports increased consumption. Additionally, foreign investments and rising
LNG imports ensure a stable supply to meet the country’s needs.
Industrialization and the need for efficient energy in sectors like chemicals,
fertilizers, and textiles also drive demand. Overall, natural gas plays a
crucial role in India’s energy transition, offering a cleaner alternative to
coal and oil.
Key Market Drivers
Government Policies and Infrastructure Development
The growth of the natural gas market in India is
significantly driven by the government’s proactive policies and infrastructure
development initiatives. Recognizing natural gas as a cleaner alternative to
traditional fuels like coal and oil, the Indian government has placed a strong
emphasis on expanding its natural gas infrastructure. One of the most notable
initiatives is the Pradhan Mantri Urja Ganga project, which aims to extend the
national natural gas grid, connecting more regions to the gas supply network.
This initiative plays a critical role in making natural gas accessible to
previously underserved areas, especially in the eastern and northeastern parts
of the country, thus boosting demand.
In addition, the Indian government has made efforts
to promote Liquefied Natural Gas (LNG) by building more LNG terminals and
increasing the number of import and regasification facilities. The expansion of
LNG terminals enhances India's ability to import natural gas from global
markets, ensuring supply stability despite fluctuations in domestic production.
As of recent years, India’s LNG import capacity has been steadily increasing,
contributing to the country’s energy security.
Furthermore, the government has incentivized the
development of natural gas infrastructure through tax exemptions, subsidies,
and reduced duties on LNG imports. These efforts help to drive down the costs
of setting up natural gas pipelines, LNG terminals, and other related
infrastructure, making it more financially feasible for both private and public
players to invest in the sector. This not only increases supply but also
reduces transportation and distribution costs, further encouraging the use of
natural gas in industrial, residential, and transportation applications.
The government has also recognized the importance
of natural gas in transitioning toward a cleaner energy mix. India’s commitment
to reduce its carbon footprint, as part of its climate change commitments under
the Paris Agreement, aligns with the expansion of natural gas use. As a result,
the government is providing favorable policies, including financial assistance
and regulatory reforms, to promote natural gas as a key energy source for power
generation, industry, and transportation. By facilitating cleaner energy
options, these policies support the growth of the natural gas market,
ultimately contributing to the overall reduction of India’s greenhouse gas
emissions.
Additionally, the City Gas Distribution (CGD)
network rollout, which aims to expand the supply of piped natural gas (PNG) to
households and compressed natural gas (CNG) for vehicles in urban centers,
plays an essential role in driving market growth. This infrastructure
initiative helps reduce dependence on traditional, more polluting fuels like
coal and petrol, enhancing air quality and promoting energy efficiency in urban
areas.
Industrial Growth, Urbanization, and Energy Demand
The industrialization and urbanization of India are
critical drivers of the country’s natural gas market growth. As India
experiences rapid urban expansion, the demand for clean energy solutions across
sectors such as power generation, transportation, and industrial manufacturing
continues to rise. This increasing energy consumption has led to greater
interest in natural gas, as it offers a cleaner, more efficient, and
cost-effective alternative to coal and oil. In the power generation sector,
India’s reliance on coal has been under scrutiny due to its adverse
environmental impact. Natural gas-fired power plants have gained popularity as
they emit fewer greenhouse gases and pollutants compared to coal-fired plants.
As India strives to meet its growing electricity demand while adhering to
environmental goals, the natural gas market is experiencing an uptick in demand
for power generation. Gas-fired plants are considered a key component of
India's energy transition, contributing to the country’s push for more sustainable
energy practices.
In addition to power generation, industrial demand
for natural gas is also on the rise. Natural gas is used as both a fuel and a
feedstock in various industries, including chemicals, fertilizers, textiles,
and food processing. India’s expanding industrial base, particularly in sectors
like petrochemicals and steel production, increasingly relies on natural gas to
power operations. Gas-based industries benefit from natural gas due to its
efficiency, cost-effectiveness, and lower emissions compared to traditional
fuels, thus fostering demand.
Urbanization, meanwhile, is leading to higher
consumption of natural gas in residential and commercial applications. As more
people move to cities, there is increased demand for clean cooking fuels,
heating, and cooling, all of which can be provided efficiently through natural
gas. The growth of city gas distribution networks ensures that urban
populations have greater access to piped natural gas (PNG) for domestic use.
Moreover, as India strives to reduce the pollution caused by burning coal or
biomass in rural areas, natural gas serves as a cleaner and safer alternative
for cooking, especially in urban and peri-urban households.
The transportation sector in India is also
undergoing a significant transformation, with natural gas increasingly used as
an alternative to petrol and diesel. The adoption of compressed natural gas
(CNG) in vehicles, especially buses, taxis, and three-wheelers, is growing due
to its environmental benefits. CNG is viewed as a cost-effective and
eco-friendly fuel, helping cities combat rising air pollution levels. The
government’s push for expanding CNG infrastructure, such as refueling stations,
further accelerates the uptake of natural gas in transportation, contributing
to the market’s growth.
Together, industrial growth, urbanization, and
rising energy demand are central to India’s natural gas market expansion. These
factors create a dynamic demand environment for natural gas in both traditional
and emerging sectors, making it a vital component of India’s evolving energy
landscape.
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Key Market Challenges
Infrastructure and Supply Chain Bottlenecks
One of the major challenges facing the Indian
natural gas market is the underdeveloped infrastructure and logistical
bottlenecks in the supply chain. Despite the government’s efforts to expand the
natural gas grid and increase LNG import capacity, the country still struggles
with gaps in the infrastructure required to effectively distribute and utilize
natural gas. India’s natural gas pipeline network is relatively limited
compared to its total energy demand, with a significant portion of the country,
especially in rural and remote areas, lacking access to natural gas. While
projects like the Pradhan Mantri Urja Ganga and the expansion of city gas
distribution networks are ongoing, these developments are not yet sufficient to
cover the vast geographical expanse of the country.
The transportation and distribution of natural gas
face significant challenges, particularly in the form of delayed or
insufficient pipeline construction, lack of adequate LNG terminals, and
inconsistent logistics for LNG storage and transportation. These gaps can
result in supply disruptions, making it difficult for industries, power plants,
and consumers to rely on a steady supply of natural gas. This not only affects
the growth of natural gas consumption but also raises the costs for
distribution and access, particularly in areas without a well-established
infrastructure.
The high cost and complexity of developing gas
infrastructure in a diverse and geographically vast country like India further
complicate the situation. The construction of pipelines requires significant
investments, often delayed due to regulatory hurdles, land acquisition issues,
and environmental concerns. The expansion of LNG terminals also faces
challenges such as space limitations, lack of coordination between federal and
state agencies, and logistical difficulties in managing imports and distribution.
Moreover, natural gas demand has risen rapidly in
urban areas and industrial zones, but the supply network hasn’t kept pace.
Cities are facing challenges related to the speed of establishing city gas
distribution networks, which limits the number of households and vehicles that
can use natural gas. Even where the infrastructure exists, the lack of
well-distributed CNG refueling stations or the high cost of setting them up in
densely populated urban centers further inhibits natural gas adoption in transportation.
As a result, the market faces an uneven distribution of natural gas that could
potentially hinder its broader acceptance and use across various sectors.
While the Indian government has committed to
improving energy infrastructure, including natural gas, the pace of development
is often slower than the rising demand, creating a challenge for stakeholders,
from government bodies to private investors, to keep up with the country’s
rapid energy needs.
Price Volatility and Dependence on LNG Imports
Another significant challenge for the Indian
natural gas market is its high dependence on imports and the resulting price
volatility. India relies heavily on Liquefied Natural Gas (LNG) imports to meet
its domestic natural gas demand, as domestic production is not sufficient to
satisfy the growing energy needs of the country. As of recent years, India has
become one of the largest importers of LNG in the world, with imports
accounting for nearly half of its natural gas consumption. This reliance on
global markets for LNG introduces a high level of price volatility, as LNG
prices are subject to fluctuations in global markets, geopolitical tensions,
and supply-demand imbalances.
Global LNG prices are often influenced by a variety
of factors, including weather conditions, international conflicts, and changes
in global production capacity. For instance, disruptions in key LNG-producing
regions such as the Middle East or Russia, or shifts in demand from major LNG
importers like China, can lead to sharp increases in LNG prices. India’s
dependency on imported LNG means that the domestic natural gas market is highly
vulnerable to these external price shocks. This can make it challenging for
both consumers and industries to forecast and manage energy costs, which may
lead to financial stress, especially for industries that are heavily reliant on
natural gas as a feedstock or fuel.
The price volatility of LNG also has broader
economic implications. India has been working to establish a competitive and
stable pricing system for natural gas, but the link between LNG prices and
domestic natural gas prices continues to create challenges for pricing
transparency. The pricing mechanism often leads to price hikes in the domestic
market, which can adversely impact sectors that rely on gas for industrial
processes, transportation, and electricity generation. In some cases, this
results in an increased reliance on coal or other cheaper but more polluting
alternatives, undermining India’s efforts to reduce emissions and promote
cleaner energy sources.
Additionally, the Indian government’s attempts to
subsidize natural gas prices to shield consumers and industries from high
international prices create fiscal burdens. As global LNG prices surge, the
government faces pressure to provide subsidies or find ways to absorb higher
costs, which may strain public finances. Furthermore, the price volatility of
LNG makes it difficult for long-term planning and investments in the sector,
discouraging potential investors and slowing down the development of critical
infrastructure.
India’s dependence on LNG imports and the
associated price volatility remain significant challenges for the natural gas
market. The market’s vulnerability to global price fluctuations, coupled with
the complexities of managing supply costs and ensuring stable pricing, poses
risks to long-term growth and energy security.
Key Market Trends
Expansion of Natural Gas Infrastructure and Policy
Support
One of the most significant trends in the India
natural gas market is the rapid expansion of natural gas infrastructure,
spurred by strong government support and investment. Recognizing the strategic
importance of natural gas in achieving energy security and transitioning to a
cleaner energy mix, the Indian government has been focusing on enhancing the
domestic natural gas infrastructure. The Pradhan Mantri Urja Ganga project is a
key initiative aimed at extending the national pipeline network across India,
connecting remote areas in the northeast and east of the country with the main
natural gas pipeline system. This infrastructure expansion is expected to
increase the accessibility of natural gas to industries, urban centers, and
households, driving demand for cleaner fuel options.
In addition to the pipeline infrastructure, India
is also focusing on the development of Liquefied Natural Gas (LNG) terminals to
enhance its ability to import natural gas. The expansion of LNG regasification
terminals, coupled with the establishment of more storage and distribution
facilities, is crucial to reducing India’s reliance on domestic production and
ensuring a stable supply of natural gas from international markets. India has
set ambitious goals to increase its LNG import capacity, which is expected to
rise substantially in the coming years, in line with growing demand.
Simultaneously, the government has actively
supported the establishment of City Gas Distribution (CGD) networks in urban
and peri-urban areas. The CGD initiative aims to provide clean natural gas for
residential, commercial, and industrial use, particularly in metro cities. This
trend is particularly important in reducing air pollution in urban centers, as
natural gas is a cleaner alternative to coal and biomass used for cooking and
heating. The expansion of CNG infrastructure for vehicles is also a critical
part of this trend. As more CNG refueling stations are established across
India, the adoption of compressed natural gas (CNG) for public transportation,
commercial vehicles, and private cars continues to grow, significantly
contributing to the reduction of vehicular emissions.
In terms of policy, the government has introduced
several measures to incentivize the adoption of natural gas. For example, the
Gas4India initiative aims to increase the share of natural gas in the country’s
energy mix to 15% by 2030, up from the current 6%. In addition, the government
has simplified regulatory processes for setting up infrastructure, including
subsidies for the installation of pipelines and CNG refueling stations. These
policy incentives, alongside infrastructure development, are making natural gas
more accessible and affordable across sectors, from power generation to
transportation.
The increasing focus on sustainable and green
energy sources has also contributed to the growing role of natural gas in
India’s energy transition. The government’s commitment to reducing its carbon
emissions in line with global climate goals has led to stronger support for
natural gas, which produces fewer emissions compared to coal and oil. As a
result, natural gas is seen as a bridging fuel in India’s move toward a
low-carbon energy future, helping to meet growing energy demand while curbing
environmental impact.
Growth of Natural Gas in Power Generation and
Transportation Sectors
A significant market trend in the Indian natural
gas sector is the increasing role of natural gas in both power generation and
transportation. As the country works toward diversifying its energy mix and
reducing its dependence on coal, natural gas is emerging as an important fuel
for power generation. India has long been dependent on coal for electricity
production, but environmental concerns and the growing need for cleaner, more
efficient energy sources are driving a shift toward gas-based power plants. Gas-fired
power generation is seen as a crucial element in India’s efforts to address air
pollution, meet emission reduction targets, and improve energy efficiency.
One of the key advantages of natural gas in power
generation is its flexibility. Unlike coal, which requires significant amounts
of time and effort to ramp up or down, gas plants can quickly adjust output,
making them ideal for meeting peak demand. This characteristic is essential for
balancing the intermittency of renewable energy sources such as solar and wind,
which are gaining prominence in India’s energy strategy. Gas-fired power plants
can provide backup generation when renewable output is low, helping to maintain
grid stability. In addition, gas plants have higher thermal efficiency than
coal-fired plants, meaning they use less fuel to generate the same amount of
electricity, which is important for improving India’s energy efficiency.
India is witnessing a trend of building new natural
gas-based power plants, with an increasing focus on combined-cycle gas turbine
(CCGT) plants, which offer higher efficiency and lower emissions than
traditional open-cycle plants. These plants can take advantage of both gas and
steam turbines to generate electricity, further improving efficiency. As India
continues to expand its electricity grid and works toward meeting ambitious
energy targets, natural gas is positioned to play a more prominent role in the
energy mix, complementing the growth of renewable sources and addressing the
country’s growing power demand.
In the transportation sector, the adoption of
compressed natural gas (CNG) as a fuel for vehicles is gaining significant
momentum. Urban areas, particularly cities like Delhi, Mumbai, and Kolkata, are
increasingly adopting CNG as a cleaner alternative to diesel and petrol in
public transportation systems, such as buses, taxis, and auto-rickshaws. The
use of CNG helps reduce harmful emissions, such as nitrogen oxides (NOx) and
particulate matter, which contribute to urban air pollution. The government’s push
to expand the CNG network, including building more refueling stations and
offering incentives for CNG vehicle adoption, is accelerating this trend.
Moreover, natural gas is also playing a growing
role in the heavy-duty transportation sector, including freight and logistics.
With the implementation of stricter environmental norms and increasing
awareness of the need for clean energy alternatives, natural gas-powered trucks
and buses are becoming more popular for long-haul transportation. The
commercial vehicle market in India is particularly interested in natural gas
for its cost-effectiveness compared to diesel, as well as the environmental
benefits.
The shift toward natural gas in both power
generation and transportation reflects a broader trend of decarbonizing energy
systems and reducing reliance on high-emission fuels. These trends are expected
to continue as India’s demand for clean and sustainable energy options grows,
with natural gas positioned as a key part of the solution.
Segmental Insights
Type Insights
Compressed Natural Gas segment
dominates in the India Natural
Gas market, The Compressed Natural Gas (CNG) segment is a dominant force in the
India natural gas market, primarily due to its growing adoption in the
transportation sector. CNG is increasingly being used as an alternative fuel
for vehicles, including buses, auto-rickshaws, taxis, and private cars, driven
by its cost-effectiveness and environmental benefits. The Indian government has
supported this transition by expanding the CNG refueling infrastructure across
major urban centers, making it more accessible for consumers and businesses
alike. This push aligns with the country’s efforts to reduce air pollution,
particularly in metro cities where vehicular emissions are a significant
concern. CNG, which produces fewer carbon emissions compared to petrol and
diesel, plays a crucial role in mitigating the adverse environmental effects of
transportation.
CNG is seen as a more economical fuel choice for
commercial fleets and public transportation due to its lower operating costs
compared to traditional fuels. The Indian government’s initiatives, such as the
expansion of City Gas Distribution (CGD) networks and the establishment of new
CNG stations, have further boosted its adoption. This growth is also supported
by favorable policies, including subsidies and tax incentives, aimed at
promoting cleaner, greener energy alternatives. As the country continues to prioritize
sustainability, the CNG segment is expected to maintain its dominance in
India’s natural gas market, driving both environmental and economic benefits.
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Regional Insights
South India dominates the India Natural Gas market,
in 2024, South India plays a pivotal role in dominating the India natural gas
market, primarily due to its strategic infrastructure, industrial growth, and
increasing adoption of natural gas as a cleaner energy source. The region is
home to key industrial hubs in cities like Chennai, Bengaluru, and Hyderabad,
where industries are rapidly shifting towards natural gas for both power
generation and manufacturing processes. The expansion of City Gas Distribution
(CGD) networks in states like Tamil Nadu, Karnataka, and Andhra Pradesh has
significantly increased the reach of natural gas to households and vehicles,
further driving demand for cleaner energy options.
South India benefits from well-established LNG
import terminals, such as the Kochi LNG terminal in Kerala, which helps meet
the region’s growing energy needs. This infrastructure development, combined
with the government’s initiatives to boost natural gas usage, particularly in
transportation through CNG adoption, has fostered rapid growth in the region.
South India’s dominance in the market is also driven by the state's commitment
to reducing carbon emissions and improving air quality. As natural gas continues
to play a critical role in meeting the energy needs of South India’s booming
economy, its dominance is set to grow further in the coming years.
Recent Developments
- As of April 2024, India's refining capacity is
256.8 million metric tons per annum (MMTPA), spread across 23 refineries. In
the 2021-22 period, refinery capacity utilization was approximately 96%. Indian
Oil Corporation (IOC) is the largest domestic refiner, with a refining capacity
of 70.1 MMTPA.
Key
Market Players
- GAIL
(India) Limited
- Gujarat State Petronet
Limited (GSPL)
- Indraprastha Gas Limited
(IGL)
- Mahanagar Gas Limited (MGL)
- Oil and Natural Gas
Corporation (ONGC)
- Oil India Limited (OIL)
- Reliance Industries Limited
- Cairn Oil & Gas vertical
of Vedanta Limited
- Essar Global Fund Limited
- Petronet LNG Limited (PLL)
|
|
|
|
- Compressed
Natural Gas
- Piped Natural
Gas
- Liquified
Petroleum Gas
|
- Industrial
- Electric
Power
- Transportation
- Residential
- Commercial
- Others
|
- North India
- South India
- West India
- East India
|
Report Scope:
In this report, the India Natural Gas Market has
been segmented into the following categories, in addition to the industry
trends which have also been detailed below:
- India Natural Gas Market, By Type:
o Compressed Natural Gas
o Piped Natural Gas
o Liquified Petroleum Gas
- India Natural Gas Market, By Application:
o Industrial
o Electric Power
o Transportation
o Residential
o Commercial
o Others
- India Natural Gas 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 Natural Gas Market.
Available Customizations:
India Natural Gas 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 Natural Gas 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]