India’s hospitality sector is facing a growing operational challenge as a shortage of commercial LPG cylinders begins to disrupt restaurant kitchens, hotel operations and catering businesses across multiple cities. With authorities prioritising domestic LPG distribution to prevent household shortages, restaurants, hotels, roadside eateries and event caterers are struggling to secure the fuel required to keep their kitchens running.

Industry leaders warn that the situation is beginning to resemble a “new lockdown” for the hospitality sector. While the government’s decision to prioritise domestic consumption aims to protect household cooking needs, the policy has significantly tightened commercial LPG availability and placed foodservice operators under immense pressure.

Supply Shift Hits Hospitality Operations

Across several Indian cities, commercial LPG cylinder supply has reportedly slowed as distributors focus on fulfilling household demand. The move was intended to ensure that domestic kitchens are not affected by shortages, but the ripple effect has been severe for the hospitality sector.

Restaurants, hotels and caterers rely heavily on LPG as their primary cooking fuel. Unlike households, commercial kitchens require multiple cylinders daily to support high-volume cooking, making them particularly vulnerable to supply disruptions.

According to industry representatives, confusion among LPG distributors following a notification issued by the Ministry of Petroleum and Natural Gas on 5 March has worsened the situation. The lack of clarity around distribution rules reportedly caused many suppliers to temporarily stop delivering cylinders to commercial establishments.
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This sudden disruption has left many hospitality businesses scrambling to source LPG cylinders through alternative channels or operate with reduced capacity.

Major Cities Report Widespread Shortages

The LPG crunch is not limited to one region. Reports of supply shortages have emerged from multiple cities including Mumbai, Pune, Aurangabad and Nagpur, while similar issues are being reported in Delhi, Karnataka, Telangana and Andhra Pradesh.

Industry groups warn that if supply disruptions persist, nearly half of Mumbai’s hotels and restaurants could be forced to shut down temporarily depending on their current LPG stock levels. Smaller establishments and mid-sized eateries are expected to be the first affected because they typically operate with limited reserves.

For many independent restaurants, a few days of LPG shortage can halt operations completely. Without cooking fuel, kitchens cannot function, making LPG availability as critical as electricity or water in the hospitality business.

Limited gas supplies force kitchens to slash menus and operating hours

The operational impact of the LPG shortage is already visible in several cities. In Bengaluru, hotels and restaurants report that business activity has dropped by around 30% due to limited LPG supply.

Many establishments have been forced to reduce operating hours, remove certain dishes from menus and limit cooking processes that consume large amounts of gas. Deep-fried dishes, for example, are being temporarily discontinued in some restaurants to conserve LPG usage. Such operational adjustments highlight how dependent India’s foodservice industry remains on LPG for everyday kitchen functions.
Beyond restaurants, the crisis is also affecting catering companies and banquet operations. Wedding events, large gatherings and corporate functions require large-scale food preparation, which depends heavily on LPG. Any uncertainty in fuel supply makes it difficult for caterers to commit to major events.

Graph Credit: EIA

How global energy tension at the Strait of Hormuz fuels India’s crunch

The LPG shortage is partly linked to broader geopolitical tensions affecting global energy supply chains. Analysts point to disruptions in energy flows through the Strait of Hormuz—one of the world’s most important oil and gas transit routes—as a contributing factor.

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with global energy markets and is one of the world’s most critical maritime chokepoints. Large volumes of oil and gas shipments pass through this narrow route every day.

In 2024, around 20 million barrels of petroleum liquids moved through the strait daily, accounting for nearly 20% of global petroleum consumption. Because India imports a large share of its LPG and crude oil from this region, any instability in the area can quickly affect domestic fuel supply.
Experts warn that disruptions along this route expose the risks of relying heavily on a single strategic chokepoint for energy imports.
Enforcement and Market Distortions

Fuel shortages can also lead to illegal practices in the market. In Lucknow, authorities recently seized 88 domestic LPG cylinders during a raid at a resort that allegedly stored them illegally for commercial use. Such cases highlight how hospitality businesses facing fuel shortages may turn to alternative or unauthorised sources of LPG, increasing regulatory risks.

At the same time, the government has attempted to stabilise supply by discouraging panic bookings. Officials report that domestic refill bookings declined from 88.8 lakh to 77 lakh within a day after awareness campaigns urged consumers not to hoard cylinders.

Authorities also noted that despite earlier system crashes caused by high booking volumes, no LPG distributors reported complete stock outages.

'Survival is at stake': Industry leaders demand government intervention

For the hospitality industry, however, uncertainty around commercial LPG availability remains the biggest concern. Restaurants operate on tight margins and rely on predictable supply chains to maintain service. Industry associations are urging the government to provide clear guidelines on commercial LPG distribution and ensure that foodservice operators continue receiving adequate supplies.

The sector is still recovering from the financial shock of the COVID-19 pandemic. Another prolonged disruption—this time driven by energy shortages—could threaten the survival of many small and medium-sized food businesses. Unless supply conditions stabilise quickly, restaurants, hotels and catering companies may be forced to continue reducing operations, cancelling events and limiting services.

For India’s hospitality industry, the LPG crunch has become more than a supply issue—it is rapidly evolving into a major operational crisis.