India's ambitious plan to boost the role of natural gas in its energy mix has hit a significant roadblock. Fresh data reveals a surprising decline in the consumption of this cleaner fuel, raising serious questions about the feasibility of the government's 2030 target.
A Sharp Decline in Gas Usage
According to the latest figures from the Petroleum Planning and Analysis Cell (PPAC), the consumption of natural gas in India witnessed an annual decline of 8.6% during the April-October period of the current fiscal year (FY26). In absolute terms, consumption dropped to 40,068 million metric standard cubic meters (mmscm), down from 43,583 mmscm in the same seven-month stretch of FY25.
This downturn marks a stark reversal from the previous year. In FY25, India's natural gas consumption had grown by 5.6%, reaching 71,314 mmscmd, largely driven by high demand from the power sector. The contrast is even sharper for October alone, with consumption in October 2025 at 5,722 mmscm, a sharp 14.58% fall compared to October 2024.
What's Causing the Demand Slump?
Industry experts point to a confluence of factors behind this unexpected drop. The primary reason is the near-total absence of demand from gas-based power plants. Unlike FY25, which saw unprecedented electricity demand leading to the activation of these plants, FY26 experienced a prolonged monsoon. This cooler weather reduced the need for peak power supply, allowing the grid to rely more on cheaper coal.
"India has about 20 GW of gas-based power generation capacity, but most of it remains idle due to the high cost of gas compared to coal," analysts note. The situation was exacerbated by lower prices for competing fuels like liquefied petroleum gas (LPG) and crude oil, making natural gas less attractive for various industries.
Furthermore, growth in other major consuming sectors has stalled. Prashant Vashisht of ICRA Ltd. highlighted that while several new fertilizer plants came online in the past two years, no major additions occurred in FY26, leading to stagnated demand from this segment, which accounts for nearly 31% of gas consumption.
The Daunting 2030 Target
The Union Ministry of Petroleum and Natural Gas has set a goal to increase natural gas's share in India's primary energy basket from the current 6.2% to 15% by 2030. However, the recent consumption trend has led experts to express skepticism about achieving this milestone.
"The target of 15% is very optimistic. It doesn't seem achievable at least for some time," Vashisht stated. He explained that to meet this goal, India would need to consume approximately 500 mmscmd of gas, more than double the current consumption of about 200 mmscmd.
While the City Gas Distribution (CGD) network, which supplies CNG and PNG, is often seen as a growth driver, its impact is limited. Accounting for around 21% of total consumption, even a robust 10-12% growth in CGD demand would translate to only a 1-2% increase in overall gas consumption.
The Long-Term Bridge Fuel
Despite the near-term challenges, the long-term outlook for natural gas in India remains tied to its role in the energy transition. Natural gas is considered a crucial 'bridge fuel'—cleaner than coal and oil—as India builds its renewable energy capacity and works towards net-zero commitments.
A joint report by PwC and Assocham projects that gas consumption could more than double from 52 million tonnes per annum (mtpa) in FY25 to 112 mtpa by FY40. This growth is seen as essential for reducing reliance on coal and solid biomass, which still meet over 80% of India's energy demand.
The current dip underscores the complex dynamics of India's energy market, where price sensitivity, weather patterns, and infrastructure development play decisive roles. For the 2030 target to move from ambition to reality, a concerted push addressing these hurdles will be imperative.
