The war in Iran was always going to creep up on India, the world’s second-largest destination for oil exiting the Strait of Hormuz. Surprisingly, the biggest immediate impact has been on dosa and dal makhani. State-owned refiners are forced to eat their losses to keep trucks and tractors moving, but commercial kitchens are starting to crater under a severe shortage of liquefied petroleum gas, or LPG.
In the 1973 energy shock, India’s industry leaned on coal, but its homes relied on the erratic availability of liquid fuels. LPG cylinders were a rationed luxury, and all middle-class families had kerosene stoves. The situation has flipped now: buses, taxis, and kitchens have switched to some form of gas to curb pollution. But unlike oil, which can be stored in rock caverns, gas requires super-cooled tanks, or pressurised vessels. India’s storage buffer is thin, and therein lies the germ of the current crisis.
Under the Essential Commodities Act, the government has prioritised household cylinders, but commercial supplies have seized up. Restaurants are unable to serve foods requiring continuous high-energy cooking. In the southern city of Hyderabad, the seasonal Ramadan delicacy of haleem —a meat-and-grain porridge requiring hours of slow cooking — is still on the menu because it is prepared in traditional wood-fired kilns. But even there, kitchens are struggling to fry the onions that garnish the dish.
The crisis extends beyond eateries. Huli Spirits, a jaggery rum micro-distillery in Karnataka, home to India’s silicon valley of Bengaluru, has decided to halt production. After paying $9,000 a month just for a license, a shutdown is a gut punch. “All our effort to procure gas has gone in vain,” founder Aruna Urs wrote to authorities this week. Retrofitting for coal would take three months, a taller chimney, and new environmental permits — a niche startup like his can’t afford any of it, Urs told me.
India’s push for a more gas-based economy is centred on liquefied natural gas, or LNG. It isn’t alone in this. Across South Asia — India, Pakistan, Bangladesh — energy companies have rolled out a $107 billion bet on imported LNG. India is pursuing the world’s second-largest terminal capacity expansion and the third-largest gas pipeline buildout, according to Global Energy Monitor.
Pressing buses and autorickshaws and urban condominiums toward burning the methane contained in LNG was supposed to be a halfway house. India has been making remarkable progress in harvesting solar energy. The idea was to eventually shift demand to renewable sources, reducing emissions, and reining in a historical dependence on the Middle East.
A side benefit was that it would free up local LPG output for use by the less affluent. But there was a catch. The production — basically propane and butane released during the refining of crude oil — didn’t keep pace with the new demand that was created by giving subsidised cylinders to 100 million new connections. That campaign is widely believed to have buttressed Prime Minister Narendra Modi’s popularity, especially in rural India, where women voters were the most exposed to toxic fumes from burning coal, wood, or cow-dung cakes.
As a result, almost 65 per cent of India’s cooking fuel today is directly imported in large vessels, and 90 per cent of that traverses the Strait of Hormuz. The government says household supplies are stable, and it’s only misinformation that’s leading to “panic booking and hoarding.” Still, people aren’t taking chances; sales of electric cookers are soaring.
Meanwhile, public facilities like 22 LPG-operated crematoriums across Pune, a large city in India’s Maharashtra state, have closed indefinitely, forcing a switch to electric in case families don’t want the traditional Hindu option of wooden pyres, which lead to the felling of 50 to 60 million trees every year nationwide. The municipal authority has said it is following the petroleum ministry’s orders to conserve gas for household use.
More pain looms for the food economy. Fertiliser plants are suspending production of urea, a critical crop nutrient, as Qatari LNG supplies stall, Bloomberg News reported Wednesday. Still, a smaller harvest is tomorrow’s problem; today’s headache is urban dislocation. If migrant workers or students can’t find affordable meals in cities, they may head back to their villages, reviving painful memories of the Covid-19 exodus.
Hopefully, it won’t come to that. New Delhi is reportedly in talks with Tehran for safe passage of tankers, though it remains unclear if such movement is feasible from an insurance perspective. A US reprieve for India to buy Russian oil — without reprising last August’s 25 per cent punitive tariffs — may keep traffic moving and tractors plowing. A plan to import LPG from America is also underway. While that should please President Donald Trump, the geography is punishing: A ship from Qatar reaches Gujarat in four days; a ship from the US Gulf Coast, dodging Red Sea tensions via the Cape of Good Hope, takes a month.
India’s gas transformation was supposed to help modernise the economy, at least until more environmentally ambitious plans like green hydrogen could become practical solutions. Instead, the Iran war has exposed the most-populous nation as a vulnerable commuter on the world’s energy highway. It’s keeping the home fires burning by cannibalising the very industries that provide much-needed employment to a restive youth. With the dough for the everyday dosa getting cold in the pan, how will India ever pitch itself to AI hyperscalers as a hot destination for their next energy-hungry data center?
