Industrial gas consumption in Gujarat has been curbed due to disruption in the supply of imported natural gas due to constraints on energy shipments through the Strait of Hormuz amid the ongoing conflict in West Asia, forcing many factories to reduce production, although authorities allow temporary use of alternative fuels and the Center is taking steps to ensure LPG supply to households.
Its impact is being felt across many gas-intensive sectors including ceramics, textiles, glass and chemicals. In the Morbi ceramic manufacturing cluster, more than 100 factories that depend on natural gas to run their furnaces have stopped production following a reduction in gas supply.
In Surat, one of the country’s largest textile hubs, thousands of units depend on natural gas for boilers and heating processes. Ashok Jirawala, president of the Federation of Gujarat Weavers Welfare Association, said, “There are about 55,000 textile units in Surat, of which about 12,000 run on gas. As of now, the crisis is not very serious. We have urged the state government to take action against those involved in black marketing of LPG cylinders. If the war goes on for long and no solution is found, the industry may be affected.”
Some industries have already adjusted production levels following the restrictions. In Vatva Industrial Estate on the outskirts of Ahmedabad, where there are more than 250 chemical manufacturing units, many factories have reduced production. Similar adjustments were reported from textile processing units and glass factories in south Gujarat.
About a quarter of India’s natural gas requirements have been affected by force majeure circumstances imposed by foreign suppliers due to the West Asia conflict, and the government is purchasing supplies through alternative routes to address the shortfall.
About 50% of India’s oil imports pass through the Strait of Hormuz, a vital waterway that Iran has effectively closed after the conflict with Israel and the US began. Fuel and gas prices have soared, raising concerns in India, which depends on imports to meet about 85% of its energy needs.
Center gives priority to domestic gas, transportation fuel
These restrictions follow the Union Ministry of Petroleum and Natural Gas’ notification on March 9 of the Natural Gas (Supply Regulation) Order, 2026, under the Essential Commodities Act to regulate natural gas allocation to all sectors amid supply disruptions linked to the Middle East conflict.
The order directs that the available natural gas be supplied to essential sectors including piped natural gas for households, compressed natural gas used in transportation and LPG production on priority basis.
Under the order, these sectors will receive up to 100% of their average consumption to ensure uninterrupted LPG supply and transportation fuel availability. Manufacturing industries and other industrial consumers connected to the national gas grid are expected to receive about 80% of their last six months’ average consumption, depending on availability, while fertilizer plants will receive about 70% of their last six months’ average consumption.
Also read: Fishing trips halted in Goa as trawlers hit due to LPG shortage amid West Asia conflict
However, industry officials said the order does not clearly specify the quantum of gas allocation for gas-based power plants, leaving the utilities to manage operations based on the available supply.
Sector officials alleged that the implementation of the March 9 order has not been completely stabilized yet. GAIL (India) Limited has sought to coordinate the available gas supply. Many city gas distribution companies have said they will implement allocation as per the central framework, but have not yet formally informed industrial customers about the revised supply quantities.
Use of gas based power plants may reduce
Gujarat Gas Ltd, the country’s largest city gas distribution company, had earlier informed stock exchanges that the availability of regasified liquefied natural gas has been disrupted due to the West Asia conflict. As a result, it issued a force majeure notice restricting the daily contracted quantity of gas to industrial customers under existing gas supply agreements from March 6.
“Activities of war are not covered under the insurance taken by Gujarat Gas Limited. The potential impact of the force majeure event, which is an ongoing event, cannot be predicted. The company is closely monitoring the developments and will keep the stock exchanges informed about any significant updates in this regard,” the company said in its March 4 statement.
Across its 27 city gas distribution licenses spread across six states and one Union Territory, Gujarat Gas supplies piped natural gas to about 4,500 factories, including ceramic manufacturing units in Morbi and several industries across Gujarat. Many of these units operate in gas-intensive sectors such as ceramics, glass, paper, textiles and chemicals.
According to the Petroleum Planning and Analysis Cell (PPAC), Gujarat has the largest concentration of industries using piped natural gas in the country. As of January 2026, 5,895 factories in the state were using PNG for manufacturing processes out of a total of 21,373 factories in India.
Similarly, out of the 48,157 commercial establishments using PNG in India, more than 24,472 businesses are located in Gujarat, reflecting the state’s extensive city gas distribution network.
Adani Total Gas Limited (ATGL) has revised downwards the price for excess natural gas supplied to some industrial customers. ₹82.95 per standard cubic meter (SCM). ₹119.90 per SCM, which is effective from March 16 to pass on lower upstream prices during the current supply constraints.
Following the disruption in LNG supply linked to the blockage in the movement of ships through the Strait of Hormuz, ATGL had earlier asked commercial and industrial customers to reduce consumption by 40% of their contracted volumes.
Power sector faces limited gas availability
Lack of availability of gas has also drawn attention towards gas-based power generation in the state.
India has about 20,000 MW of installed gas-based power generation capacity, of which about 25-30% is located in Gujarat. Much of this capacity has been underutilized in recent years as imported LNG has often been too expensive to keep power generation viable.
A June 2025 report by the Institute for Energy Economics and Financial Analysis (IEEFA) said 31 gas-based plants with a combined capacity of about 8 GW did not generate any power during FY2025, leaving them effectively stranded. About 5.3 GW of this idle capacity was exhausted in April 2025, while the remaining fleet is operating at plant load factors of about 14-17%.
State power utility Gujarat Urja Vikas Nigam Limited (GUVNL) is running gas-based plants only when needed, a senior government official said. The installed gas-based capacity of GUVNL’s generation arm is around 1,800 MW, but the plants operate at plant load factors of around 20-30% and are often shut down when not required, the official said. They are used primarily during evening peak hours when solar energy production declines and electricity demand increases during summer.
Also read: LPG shortage hits hotels, restaurants, schools in Uttarakhand amid West Asia conflict
“Gas-based power plants in the country require about 70 million MMBTU of gas, while the current supply is about 15 million MMBTU of gas. The government’s March 9 order has placed gas-based power plants in the lowest priority category and as a result these plants may not function fully. Many of them were already stranded due to feasibility issues,” said an official working with a major city gas distribution company.
To help industries manage the situation, the Gujarat Pollution Control Board (GPCB) issued a circular on March 5, allowing industries dependent on gas-based utilities to temporarily switch to the approved fuel where gas supply has fallen. This relaxation will remain in effect for three months, after which the board will review the situation.
Separately, the central government has also taken steps to secure the supply of cooking fuel. On March 5, the Ministry of Petroleum and Natural Gas directed oil refineries to make maximum use of propane and butane streams for production of liquefied petroleum gas and supply it to public sector oil marketing companies for distribution to domestic consumers.
