Centre invokes Essential Commodities Act:  What is ECA and why it matters for LPG supply 

Amid the ongoing Iran war and rising concerns over disruptions to global energy routes, the Union government has invoked the Essential Commodities Act (ECA) to ensure an uninterrupted supply of natural gas and cooking fuel in the country. The move comes as tensions in West Asia threaten shipments passing through the Strait of Hormuz, a key route for India’s oil and gas imports.

Under the order issued by the Ministry of Petroleum and Natural Gas (MoPNG), gas supply will now be prioritised for domestic piped natural gas (PNG), compressed natural gas (CNG) used in vehicles, and liquefied petroleum gas (LPG) production. The decision aims to protect household consumption and transport services even if imports become tighter due to the conflict.

Officials said the step was necessary to prepare for possible shortages triggered by escalating hostilities in the Middle East, where shipping movement has become uncertain after recent military strikes and retaliatory actions in the region.

Heavy import dependence raises risk

India’s high dependence on imported fuel has made the situation particularly sensitive. During FY2024-25, the country consumed about 31.3 million tonnes of LPG, but domestic production stood at only 12.8 million tonnes, forcing the country to rely heavily on imports.

Around 85-90% of LPG imports come from West Asian countries such as Saudi Arabia, and most of these shipments pass through the Strait of Hormuz. The route has come under pressure after the escalation involving Iran, the United States and Israel, raising fears of supply disruptions.

Officials said the government is closely monitoring the situation as any prolonged blockage of the route could affect cooking gas supply, fertiliser production, and city gas distribution networks.

What is the Essential Commodities Act?

The Essential Commodities Act allows the Centre to regulate the production, supply, distribution and trade of critical goods to ensure their availability and prevent hoarding or price spikes. The law gives the government powers to impose stock limits, direct supply, or control distribution during extraordinary situations such as war, natural disasters, or sharp price increases.

The Act has historically been used to manage shortages of food items such as wheat, rice, pulses and edible oils. Amendments made in 2020 limited routine use of stock limits but retained the government’s authority to intervene during emergencies.

The current order treats natural gas and LNG as petroleum products, which are listed as essential commodities under the law. This interpretation is based on a Supreme Court ruling that clarified natural gas falls within the definition of petroleum products, allowing the government to regulate supply during disruptions.

Why was the Essential Commodities Act invoked to ensure LPG supply?

Under the new order, gas consumers have been divided into four priority categories.

The first category, which will receive 100% of its recent average supply, includes PNG for households, CNG for transport, LPG production, and fuel required for pipeline operations.

The second category includes fertiliser plants, which will receive at least 70% of their recent average consumption, given their importance for agriculture.

The third category covers grid-connected industries, including tea and other manufacturing units, which will get around 80% of their usual supply.

The fourth category includes industrial and commercial users connected to city gas networks, who will also receive about 80% of their recent consumption levels.

How does the Essential Commodities Act help prevent LPG shortages?

Under the order issued under the Essential Commodities Act, both public-sector and private refiners have been directed to channel all propane and butane output exclusively toward the production of LPG, as LPG is primarily composed of these two fuels. The order also mandates that the LPG produced under this directive must be supplied only to the three state-run oil marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd.

Earlier use of the Act

The government has invoked the Essential Commodities Act several times in recent years to manage supply shocks. In 2025 and 2023, stock limits were imposed on wheat to control prices, while in 2022 the Act was used to monitor pulses and sugar supplies. During the COVID-19 lockdown in 2020, the law was used to prevent hoarding and ensure availability of essential goods.

Officials said the latest move is a precautionary step to ensure that household fuel, transport and fertiliser supply remain stable even if the West Asia conflict continues.

Additional steps to boost LPG production

In a related move earlier this month, the government directed oil refining companies to maximise LPG production and prioritise domestic supply. Public sector oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — were asked to divert propane and butane streams toward LPG instead of petrochemical use. These companies supply cooking gas to nearly 99% of Indian households, making the measure critical for ensuring availability during the ongoing geopolitical crisis.