India witnessed a significant double-digit decline in its liquefied natural gas (LNG) imports during the first half of the financial year 2025-26, driven by an unusually strong monsoon season and unpredictable price movements in the global gas market. This downturn has led to a notable reduction in the country's reliance on imported gas.
Key Data Points Highlight the Downturn
According to official data from the Petroleum Planning and Analysis Cell (PPAC), India's LNG imports for the April-September period fell by 11.1% to 16.9 billion cubic metres (bcm), down from 19.0 bcm in the same period last year. This decline occurred even as domestic natural gas production dipped slightly from 18.2 bcm to 17.6 bcm.
Consequently, India's dependence on imported gas contracted. PPAC estimates show that imported gas accounted for 49.3% of consumption in the first half of FY26, a decrease from 51.5% a year ago. This is a crucial metric for a nation that is the world's fourth-largest LNG importer.
The Twin Forces: Monsoon Rains and Price Volatility
Two primary factors converged to dampen demand for imported gas. First, the southwest monsoon from June to September was exceptionally robust, with the India Meteorological Department (IMD) recording rainfall at 108% of the long-period average, the highest since 2001.
"We were prepared to import LNG in large volumes, anticipating higher-than-usual demand from the power sector. But the need did not arise as power demand did not jump significantly due to the rains this year," revealed a senior executive at a major Indian oil and gas company.
This plentiful rainfall led to cooler temperatures, which suppressed overall power demand. As a result, gas-based power plants required less feedstock. Data from the Central Electricity Authority (CEA) shows that gas-based power production plummeted by a quarter to 15.8 billion units.
Second, the international LNG market experienced significant volatility, with spot prices remaining elevated for much of the period. This high-cost environment prompted key industrial consumers, such as fertiliser plants and refineries, to switch to more economical alternative fuels like naphtha.
Sector-Wise Breakdown of the Demand Slump
The decline in regassified LNG (RLNG) consumption was felt across several major industries:
- Power Sector: RLNG use fell by almost 18% year-on-year to 1.8 bcm.
- Fertiliser Sector: As the largest gas consumer, this sector saw an 8.5% drop in RLNG use to 8.2 bcm.
- Refinery Sector: Consumption here declined sharply by 17.3% to 1.9 bcm.
However, one sector bucked the trend. The fast-expanding city gas distribution (CGD) network, which supplies homes and vehicles, recorded a 23.1% surge in imported gas use to 2.9 bcm, as alternative fuels are not a viable option for this segment.
Future Outlook: A Temporary Phase?
Industry experts largely view this import dip as a temporary phenomenon. The long-term forecast suggests that global LNG prices are expected to cool down as new supply capacities become operational from 2026 onwards. This is likely to make gas more attractive for price-sensitive Indian industries once again.
Indian gas importers remain committed to their long-term strategy, continuing to invest in the expansion of the country's LNG import infrastructure. The government's push to increase the share of natural gas in the primary energy mix to 15% by 2030, from the current over 6%, underscores gas's role as a critical, less-polluting transition fuel on India's journey towards a greener economy.
