India stands at a crossroads in its energy transition, balancing economic growth, energy security, and sustainability. With an ambitious target of increasing natural gas’s share to 15% of the energy mix by 2030, the country is positioning gas as a cleaner alternative to coal while complementing its renewable energy expansion. However, achieving this vision requires overcoming significant cost, infrastructure, and policy hurdles.
The Case for Natural Gas in India’s Energy Strategy
Currently, natural gas contributes only 6%-7% of India’s primary energy consumption—far below the 24% global average. In the power sector, its role is even smaller, accounting for just 2% of electricity generation, overshadowed by coal, which dominates at 75%.
Why, then, is India pushing for a gas-powered future?
- Lower Emissions – Natural gas emits up to 60% less CO₂ than coal, making it a viable transition fuel in India’s decarbonization efforts.
- Reliability & Flexibility – Unlike solar and wind, gas is not subject to intermittency, providing stable power supply and peak-load balancing.
- Stranded Capacity Utilization – India has nearly 15 GW of stranded gas-based power plants that could be reactivated with the right pricing and policy incentives.
Yet, despite its advantages, gas struggles to compete with cheap coal and increasingly affordable renewables, which offer electricity at a 22% discount compared to coal-fired power. This cost differential raises concerns about the economic viability of gas-fired power unless structural reforms drive down prices.
A Turning Point: India’s Gas Market Gains Momentum
After a decade of stagnation, India’s gas consumption has surged, growing by over 10% annually in both 2023 and 2024. This marks a significant turning point, driven by:
- Infrastructure Expansion – Since 2019:
- The number of compressed natural gas (CNG) stations has quadrupled.
- Household gas connections have doubled.
- India’s gas transmission network has expanded by 40%, with another 50% growth expected by 2030.
- Rising Domestic Production – Gas output, which met 50% of demand in 2023, is projected to reach 38 bcm by 2030. While a positive development, it still falls short of the country’s future needs.
- Supportive Policy Reforms – The government is pushing for gas to be included in the Goods and Services Tax (GST) framework, which could significantly reduce costs and improve market dynamics.
The International Energy Agency (IEA) forecasts that India’s gas demand will rise by nearly 60% to 103 bcm annually by 2030. In a high-growth scenario, it could even reach 120 bcm, comparable to South America’s total consumption.
Rising LNG Imports: A Double-Edged Sword
With domestic gas production unable to meet demand, India is increasingly reliant on liquefied natural gas (LNG) imports, which accounted for 51.5% of consumption in the first half of FY 2024-25, up from 46.3% the previous year.
To sustain its gas ambitions, India’s LNG imports will need to more than double to 65 bcm annually by 2030. However, this exposes the country to:
- Price Volatility – As long-term supply contracts expire post-2028, India risks exposure to fluctuating spot market prices.
- Geopolitical Uncertainty – With global gas markets tightening, securing stable supply agreements will be critical.
- Infrastructure Constraints – Although regasification capacity currently stands at 47.7 million metric tons per year, further expansion is needed to accommodate rising LNG imports.
To address these risks, India is actively securing long-term LNG contracts, including recent agreements with Abu Dhabi’s ADNOC, and investing in strategic gas infrastructure.
Sectoral Growth: Where Will the Demand Come From?
India’s gas demand is set to rise across multiple sectors, with key drivers including:
- City Gas Distribution (CGD) – The fastest-growing segment, driven by CNG adoption in transport and increasing household gas connections.
- Heavy Industry & Manufacturing – Expected to add 15 bcm of demand by 2030 as industries shift from liquid fuels to gas.
- Oil Refining – Refinery gas demand will grow by 4 bcm as refineries expand their gas-based operations.
However, gas’s role in power generation remains uncertain. High costs have left many gas-fired plants idle, and without policy intervention or lower LNG prices, their revival remains unlikely.
Challenges and the Path Forward
While India’s gas ambitions are gaining momentum, several hurdles must be addressed:
LNG Procurement Strategy – Long-term agreements must be secured well in advance of contract expirations post-2028 to mitigate supply risks.
Pricing Competitiveness – For gas to scale up, pricing reforms are needed to lower industrial and power sector costs.
Pipeline Access & Tariffs – Expanding pipeline connectivity and reducing transmission charges will be key to improving affordability.
A Defining Decade for India’s Gas Future
India’s push toward a gas-powered future is well underway. With the right mix of infrastructure investments, regulatory reforms, and market incentives, natural gas could play a significant role in reducing emissions while ensuring energy security.
However, the success of this transition will depend on its ability to balance affordability, availability, and sustainability. The coming decade will determine whether natural gas can emerge as a true game-changer in India’s energy mix—or whether coal and renewables will continue to dominate.
Can natural gas realistically bridge India’s transition toward a cleaner energy future?
Sources:
India’s natural gas demand set for 60% rise by 2030, supported by upcoming global LNG supply wave – News – IEA. (2025, February 12). IEA. https://www.iea.org/news/indias-natural-gas-demand-set-for-60-rise-by-2030-supported-by-upcoming-global-lng-supply-wave
India’s natural gas use target hinges on higher gas-fired power generation. (2025, February 13). Reuters. https://www.reuters.com/business/energy/indias-natural-gas-use-target-hinges-higher-gas-fired-power-generation-2025-02-13/
Surabhi Sahu. (2025, February 13). IEW 2025 INTERVIEW: India on track to achieve 2030 natural gas target, says GEECL MD. S&P Global. https://www.spglobal.com/commodity-insights/en/news-research/latest-news/lng/021325-iew-2025-interview-india-on-track-to-achieve-2030-natural-gas-target-says-geecl-md
Shariq Khan. (2025, February 12). India gas demand to surge by 2030, doubling LNG imports, says IEA. Reuters. https://www.reuters.com/business/energy/india-gas-demand-surge-by-2030-doubling-lng-imports-says-iea-2025-02-12/
