Multiple hotel and restaurant associations and establishments across metros such as Mumbai, Bengaluru, and Chennai have stated that an acute shortage of commercial LPG cylinders is disrupting the sector.
Local media reports across the cities state the same. Indian Hotels and Restaurants Association, or AHAR, stated that at least 20 per cent of the hotels and restaurants in Mumbai had to shut down temporarily due to the recent development.
"Despite being a basic operational requirement for restaurants and hotels, commercial cylinders are becoming increasingly difficult to obtain through proper channels. This shortage is creating significant operational challenges for many establishments within the hospitality sector," stated AHAR.
The association also accused illegal roadside vendor of "openly operating using domestic (non-commercial) LPG cylinders meant strictly for household use, often without licences, compliance, or paying taxes".
This is at the heels of the Union Ministry of Petroleum and Natural Gas issuing directives to oil refineries in India to lift their LPG production to increase the supply to the domestic market.
"In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, the ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use," read an official statement.
Centre invokes Essential Commodities Act
The Government of India last week invoked the ESMA ( Essential Commodities Act of 1955 ) in a bid to ensure the supply of natural gas. "The supply of natural gas must be treated as priority allocation and shall be maintained subject to operational availability to one hundred per cent of their average past six-month average gas consumption," read the notification from the Centre.
On Saturday, the war raging thousands of kilometres away in Iran arrived at the doorstep of Indian households through the cooking gas cylinder, when the price of a 14.2-kg domestic LPG cylinder was hiked by ₹60 across the country.
At the same time, the 19-kg commercial LPG cylinder used by hotels and restaurants went up by ₹114.50. This followed an earlier ₹28 increase on March 1, taking the total commercial LPG hike in 2026 to ₹302.50.
This seems to have triggered activity in the black market and hoarding, leading to a sudden shortage of commercial LPG cylinders, as per many ground reports.
"The ministry has prioritised domestic LPG supply to households and introduced a 25-day inter-booking period to avoid hoarding/black marketing. Non-domestic supplies from imported LPG are being prioritised to essential non-domestic sectors such as Hospitals and Educational institutions. For LPG supply to other non-domestic sectors, a committee of three EDs of OMCs have been constituted to review the representations for LPG supply to restaurants/hotels/other industries," added the ministry.
Some of India’s LPG and LNG supply chains run through the Strait of Hormuz, which Iran closed in the recent escalations in conflict in the Middle East.
According to market watchers, if the military action continues, domestic cylinder prices in India could hit ₹1000, which means a proportional jump in commercial LPG prices.