Around 20% of Mumbai's hotels and restaurants have already shut operations, kitchens in Bengaluru have gone dark after commercial cylinder supplies stopped from 9th March. Chennai distributors have completely halted deliveries citing zero stock and Delhi's commercial supply has been suspended until further notice — with industry bodies warning that nearly half of Mumbai's eateries alone could close within days if gas deliveries do not resume — a crisis that has its roots in a government directive that, in protecting household kitchens, inadvertently darkened restaurant ones across the country.
How a Govt Order Stopped Restaurant Kitchens
The immediate trigger was a ministry directive issued on 5th March asking public sector OMCs to prioritise domestic LPG supplies to households in the face of global supply disruptions caused by the ongoing US-Iran conflict and the near-closure of the Strait of Hormuz. The intent was to protect the over 300mn (million) household (domestic) cooking gas users in India. The unintended consequence is a cascading confusion at the distributor level that has effectively halted commercial LPG deliveries across multiple cities.
The Federation of Hotel and Restaurant Associations of India (FHRAI) wrote to Hardeep Singh Puri, Union minister for petroleum and natural gas, flagging 'widespread disruption at the ground level'. It stated that several distributors are withholding supplies, citing the 5th March government order. Restaurant associations from Maharashtra, Karnataka, Tamil Nadu and Delhi have all written to the petroleum ministry seeking urgent intervention.
In Bengaluru, the Bangalore Hotels Association issued a notice confirming that commercial LPG cylinder supplies had stopped from 9th March — despite earlier assurances from oil companies that there would be no disruption for at least 70 days. "The sudden stoppage of supply is a big blow to the hotel industry," the Sssociation stated, warning that hotels would begin closing from the following day.
In Chennai, the Chennai Hotel Association reported that distributors had completely stopped supplying cylinders, citing no available stock. In Delhi, commercial cylinder supply was suspended until further notice.
Mumbai: 20% Shut, 50% at Risk
Mumbai has emerged as the worst-hit city. The hospitality association AHAR reported on Tuesday that around 20% of the city's hotels and restaurants had already suspended operations, with the situation threatening to worsen rapidly. "If the situation continues like this, nearly half of Mumbai's hotels could shut down in the coming days," the Association warned.
While commercial LPG cylinder refills to hotels and restaurants have completely stopped, the waiting period for domestic LPG refills is now about eight days.
AHAR clarified that there has been no collective call for a shutdown, as each establishment will make its own decision based on remaining LPG inventory. It, however, cautioned that the window is narrowing fast.
The National Restaurant Association of India (NRAI) says restaurants currently have, at best, around a week's worth of commercial LPG stock remaining. In its communication to the petroleum ministry, the NRAI warned that prolonged supply disruptions could force large-scale suspensions across the sector, describing the potential impact as 'catastrophic'.
The disruption is already beginning to ripple into the food delivery ecosystem. Except for Westlife Foodworld (up 2.07%), shares of other listed food companies and delivery platforms are down or flat during morning trading on Tuesday. It includes Jubilant FoodWorks (down 0.71%), Devyani International (down 0.27%), Swiggy (down 0.86%), and Eternal (down 0.09%).
Government's Response: Panel, Production Boost, Booking Curbs
The MoPNG moved on several fronts simultaneously to contain the crisis. First, it invoked emergency powers to direct oil refineries to ramp up LPG production, with additional output earmarked for domestic household use. Second, it constituted a committee of three executive directors of OMCs to review representations from restaurants, hotels and other industries for commercial LPG supply allocation.
"For LPG supply to other non-domestic sectors, a committee of three EDs of OMCs has been constituted to review the representations for LPG supply to restaurants, hotels and other industries," the
ministry says in a post on X.
Non-domestic supplies from imported LPG are being prioritised for essential services such as hospitals and educational institutions.
Third, and most visibly for ordinary consumers, the ministry raised the minimum inter-booking period for domestic LPG cylinder refills from 21 days to 25 days, a measure explicitly designed to prevent panic buying after household demand surged 15%-20% on fears of supply disruption.
Officials are at pains to point out that the measure is not an admission of shortage. "Average households consume seven to eight LPG cylinders of 14.2kg in a year and should normally not need a refill in less than six weeks," an official says.
India is also exploring options to secure additional LPG supplies from the US and Canada to partially substitute disrupted Middle East sources.
Govt Invokes Essential Commodities Act
Amid the prevailing situation in West Asia, the Union government has invoked the Essential Commodities Act, 1955, to regulate the production, maintain the supply, ensure equitable distribution and ensure the availability of natural gas for priority sectors.
As per a notification from the MoPNG, priority for natural gas supply has been given to sectors including domestic piped natural gas supply, compressed natural gas for transport, LPG production, including LPG shrinkage requirements, pipeline compressor fuel, and other essential pipeline operational requirements.
It says that the supply shall be maintained, subject to operational availability, to 100% of their average past six-month gas consumption.
The Price Shock That Preceded the Shortage
The supply crisis was preceded by a sharp and unannounced price revision. Oil marketing companies quietly updated their pricing portals past midnight on 7th March and millions of Indian households woke up to a ₹60 hike on domestic 14.2-kg LPG cylinders — taking the Delhi price to ₹913, the highest since August 2023. Commercial 19-kg cylinders were hiked by a steeper ₹115. Commercial LPG prices have now risen by around ₹302.50 in 2026 alone.
For Ujjwala Yojana beneficiaries, over 100mn poor households that have received free LPG connections since 2016, the revised price works out to ₹613/cylinder after accounting for the unchanged ₹300 subsidy for up to 12 refills per year. The subsidy provides partial relief but does not neutralise the impact of the absolute price increase.
India's Exposure: Why the Numbers Are Stark
India's dependence on Middle East LPG makes it acutely vulnerable to the current disruption. The country consumed 31.3MT of LPG in FY24-25, producing only 12.8MT domestically, with the rest imported. Of the imported quantity, 85%-90% comes from Middle Eastern suppliers, primarily Saudi Arabia, that rely entirely on the Strait of Hormuz for export. With the strait effectively closed since 1st March following Iranian strikes on Gulf shipping, those import flows have been severely curtailed.
About 40% of India's crude oil imports and 60% of its LNG supplies also transit the Strait of Hormuz, making the energy exposure significantly broader than just cooking gas.
On Monday, Parliament was informed that India has a total storage capacity for crude oil and petroleum products covering 74 days of consumption, comprising 9.5 days in strategic petroleum reserves and 64.5 days held by OMCs, which provides a buffer against short-term supply shocks.
Fuel Prices Held, Inflation Watched
A senior government official confirmed that petrol and diesel prices will not be raised for now despite international crude oil having crossed US$100 a barrel, with OMCs expected to absorb current cost pressures in the near term.
Finance minister Nirmala Sitharaman told Parliament that the impact of rising crude prices on India's inflation was not estimated to be substantial at this point, as the country's inflation remained near its lower bound.
There was some relief on Tuesday as crude prices eased close to 6%, Brent falling to US$92.45 a barrel and WTI to US$88.65 — after US president Donald Trump said the military campaign against Iran would end 'very soon' and gave assurances that the Strait of Hormuz would remain open. "We have a lot of Navy ships there," Mr Trump says.
The brief price retreat offered cautious comfort to energy markets, though the underlying supply disruptions are expected to take time to unwind.
For India's restaurant owners, counting their remaining cylinders and watching their kitchen fires dim, that comfort cannot arrive soon enough.
