West Asia war unlikely to hit India's booming CNG car sales
Car buyers have been increasingly opting for CNG-powered variants for lower running costs
- Mar 30, 2026,
- Updated Mar 30, 2026 4:58 PM IST
As the West Asia war and the subsequent closure of the Strait of Hormuz choke off over half of India’s liquefied natural gas (LNG) imports, experts expect compressed natural gas (CNG) car volumes to remain unaffected in the short term.
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The share of CNG-powered cars in new car sales has hit new highs in recent months. CNG penetration has gone up from 18% in the calendar year 2024 to 21% in 2025, according to the Federation of Automobile Dealers Associations (FADA). It hit a high of 23.5% in February from 20% in the same month last year. In comparison, the penetration of electric vehicles stood at 3.5% in the first three months of 2026.
“Unless the war prolongs for a few more months, I don’t think the CNG penetration is going to change quickly,” says C.S. Vigneshwar, President, Federation of Automobile Dealers Associations (FADA).
Despite the launch of several electric vehicle models, EV penetration has been growing slowly but not significantly like CNG, says Vigneshwar, adding that the Goods and Services Tax (GST) rate rationalisation brought down prices of ICE vehicles vis-à-vis EVs.
Vigneshwar, however, believes that if gas prices increase, there will be a natural swing towards electric vehicles.
According to Poonam Upadhyay, Director of Crisil Ratings, the West Asia conflict highlights that CNG prices and supply can be volatile, but it is unlikely to drive a clear shift away from it.
“For most buyers, CNG still makes more sense given its lower upfront cost and easy refuelling access. EVs are becoming more relevant, but adoption will hinge on better charging infrastructure and a wider presence in the mass, affordable segment. While newer models and concepts like battery-as-a-service (BaaS) are beginning to address upfront cost concerns, most new launches are in the premium category,” says Upadhyay.
“Any meaningful shift towards EVs likely to depend on how quickly infrastructure improves and affordable options scale up,” she adds.
Puneet Gupta, Director, India & ASEAN Automotive Market, S&P Global Mobility, says any increase in the price of CNG will badly dampen the economics of CNG vehicles for consumers. “High vehicle and fuel prices and inconvenience make it a less attractive option. However, in the short- and mid-term, CNG will keep on driving volumes and eventually electrification will take it over,” Gupta believes.
As the West Asia war and the subsequent closure of the Strait of Hormuz choke off over half of India’s liquefied natural gas (LNG) imports, experts expect compressed natural gas (CNG) car volumes to remain unaffected in the short term.
Must read: Maruti Suzuki to invest ₹10,189 crore to build a new plant in Gujarat
The share of CNG-powered cars in new car sales has hit new highs in recent months. CNG penetration has gone up from 18% in the calendar year 2024 to 21% in 2025, according to the Federation of Automobile Dealers Associations (FADA). It hit a high of 23.5% in February from 20% in the same month last year. In comparison, the penetration of electric vehicles stood at 3.5% in the first three months of 2026.
“Unless the war prolongs for a few more months, I don’t think the CNG penetration is going to change quickly,” says C.S. Vigneshwar, President, Federation of Automobile Dealers Associations (FADA).
Despite the launch of several electric vehicle models, EV penetration has been growing slowly but not significantly like CNG, says Vigneshwar, adding that the Goods and Services Tax (GST) rate rationalisation brought down prices of ICE vehicles vis-à-vis EVs.
Vigneshwar, however, believes that if gas prices increase, there will be a natural swing towards electric vehicles.
According to Poonam Upadhyay, Director of Crisil Ratings, the West Asia conflict highlights that CNG prices and supply can be volatile, but it is unlikely to drive a clear shift away from it.
“For most buyers, CNG still makes more sense given its lower upfront cost and easy refuelling access. EVs are becoming more relevant, but adoption will hinge on better charging infrastructure and a wider presence in the mass, affordable segment. While newer models and concepts like battery-as-a-service (BaaS) are beginning to address upfront cost concerns, most new launches are in the premium category,” says Upadhyay.
“Any meaningful shift towards EVs likely to depend on how quickly infrastructure improves and affordable options scale up,” she adds.
Puneet Gupta, Director, India & ASEAN Automotive Market, S&P Global Mobility, says any increase in the price of CNG will badly dampen the economics of CNG vehicles for consumers. “High vehicle and fuel prices and inconvenience make it a less attractive option. However, in the short- and mid-term, CNG will keep on driving volumes and eventually electrification will take it over,” Gupta believes.