LPG Shortage: Brewing Challenges for Restaurants and Industries

India faces an LPG shortage impacting quick-service restaurants and industries. Despite increased domestic production, reliance on imports and geopolitical tensions in the Strait of Hormuz exacerbate the issue. Restaurants risk operational disruptions, while glass and plastics manufacturing experience rising costs, affecting sectors from FMCG to alcoholic beverages.

The ongoing shortage of liquefied petroleum gas (LPG) in India is presenting significant operational challenges for quick-service restaurants and several manufacturing industries. Despite an increase in domestic production, the country remains heavily reliant on imported LPG, with 90% passing through the geopolitically sensitive Strait of Hormuz, according to a Goldman Sachs report.

The government is focusing on ensuring LPG supply for essential sectors such as domestic cooking and hospitals, while curbing supply to non-essential commercial enterprises. Quick-service restaurant chains, including major players like Jubilant FoodWorks and Devyani International, are at risk of disrupted operations. These chains depend on commercial LPG cylinders, with current inventories lasting less than a week, potentially causing a temporary revenue hit.

Additionally, the glass manufacturing sector is facing production curtailments due to gas supply shortages, which could raise glass prices, hiking input costs for liquor companies. Separately, a government directive to prioritize LPG output may tighten petrochemical supplies, potentially increasing plastic costs. This development could further elevate expenses for fast-moving consumer goods (FMCG) firms and paint manufacturers reliant on crude derivatives.

(With inputs from agencies.)