Natural gas reached 7.12% of India's primary energy supply in FY25, up from 7% in FY24. This growth, driven by city gas and industrial demand, highlights a shift toward cleaner fuel targets as the government projects demand to hit 300 MSCMD by 2030.
The share of natural gas in India's energy mix reached 7.12% during the 2024-25 fiscal year, according to provisional data released by the Ministry of Statistics and Programme Implementation. This marks a steady, albeit gradual, climb from 7% in the previous year and 6.7% in FY23, reflecting ongoing efforts to increase the use of cleaner energy sources across the country.
Infrastructure Expansion and Demand Outlook
The rising share of natural gas is primarily supported by the aggressive expansion of City Gas Distribution (CGD) networks. These networks aim to provide Piped Natural Gas (PNG) to households and industries, alongside a broader rollout of Compressed Natural Gas (CNG) stations for the transport sector. According to information shared in the Lok Sabha by the Ministry of Petroleum and Natural Gas, the demand for natural gas is projected to increase to between 260 and 300 million standard cubic meters per day (MSCMD) by 2030. This forecast, sourced from the Petroleum and Natural Gas Regulatory Board, underscores the government's long-term goal of moving toward a gas-based economy.
Investor Context and Market Implications
For investors, this trend impacts several sectors, including oil and gas distributors, fertilizer manufacturers, and power generation companies. Companies involved in city gas distribution, such as Indraprastha Gas, Mahanagar Gas, and Gujarat Gas, are key beneficiaries of this infrastructure build-out. However, the sector also faces specific risks. Profitability for these companies is often tied to the pricing of domestic versus imported liquefied natural gas (LNG). High reliance on imported LNG can lead to margin pressure when global prices rise, as companies must balance competitive pricing to encourage CNG and industrial adoption against their own procurement costs.
Furthermore, the speed at which this energy mix shifts depends on the execution of pipeline infrastructure and the pace of conversion in heavy industries, which currently rely heavily on coal or oil. Investors should track future updates on volume growth in the CGD sector and any policy adjustments regarding natural gas pricing or supply allocation. The ability of these firms to maintain or improve margins while scaling their distribution networks remains a primary monitorable for the coming years.