The Daily Brief Why India’s LPG System Is Under Pressure
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May 15, 2025 Explore the pressures facing India's LPG system as it transitions from a luxury to a necessity. Discover how rising global oil prices and local economic challenges are affecting public welfare. Dive into the automobile market, where manufacturers like Tata Motors are grappling with costs and regulatory hurdles. The discussion also reveals Tata Motors' plan to separate its electric and passenger vehicle divisions, alongside insights into the future of passenger vehicle sales and rural demand dynamics.
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India's Delicate LPG Balance
- India's LPG system balances political sensitivity, public welfare, and oil company losses through careful pricing and subsidies.
- The Ujwala scheme dramatically increased LPG coverage, improving health and dignity for poor households.
Oil Companies Absorbing LPG Losses
- Oil companies suffer heavy losses because LPG prices are kept artificially low to shield consumers from global price shocks.
- Under-recoveries were around 220 rupees per cylinder in FY 2025 but reduced slightly after a price hike.
Challenges of US LPG Imports
- Switching LPG imports from the Middle East to cheaper US LPG is complex due to different propane-butane mixes.
- India's infrastructure requires specific gas blends for safety and performance, needing major adjustments for alternative supplies.