Workers prepare butter chicken at the Daryaganj restaurant in New Delhi, India, Monday, Feb. 12, 2024. The Daryaganj and Moti Mahal Delux restaurants are in a legal battle over ownership of butter chicken. Photographer: Saumya Khandelwal/Bloomberg via Getty Images
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The Iran war is causing global disruption and Indian restaurants are threatened by it.
The conflict threatens India’s supply of liquefied petroleum gas (LPG), most of which is imported, and the world’s supply of threatened by disturbances in the Strait of Hormuz.
On Tuesday, India’s Ministry of Petroleum and Natural Gas said it was directing oil refiners to prioritize supplying LPG to the 330 million households that use it as a primary cooking fuel, more than 3 million businesses that use commercial LPG cylinders.
This is causing a “crisis situation” that will lead to the closure of many restaurants in the coming days, Sagar Daryani, president of the National Restaurant Association of India, told CNBC.
He added that 90% of restaurants in India depend on LPG cylinders to run their kitchens.
The industry was already facing low demand and high costs, but if LPG supply problems persist, it would lead to “business closures and job losses”, Daryani said.
The NRAI represents more than 500,000 restaurants across India. The Indian industry generates an annual turnover of more than 5.7 trillion rupees ($78.9 billion) and employs more than 8 million people, according to the NRAI.
On Tuesday, India’s Ministry of Petroleum and Natural Gas said in a post
Announcing the changes to LPG supply, India’s Ministry of Petroleum and Natural Gas said it would form a committee to review representations on LPG supply to restaurants, hotels and other commercial industries.
The NRAI urges the government to classify the restaurant industry as an essential service, Daryani said.
India is the world’s second-largest LPG importer and consumed 31.3 million metric tons in fiscal 2025, according to an S&P Global report on Tuesday. The country can only meet 41% of this demand with its domestic LPG supply, he stated.
“India imports approximately 67% of its LPG needs, and approximately 90% of these imports transit through the Strait of Hormuz,” Manish Sejwal, senior vice president of commodity markets, oil-NGL/LPG and naphtha at Rystad Energy, told CNBC by email.
On the brink of closure
Mumbai-based AHAR, another hotel and restaurant lobby group, has raised the issue of LPG supply shortages with local authorities and warned that many of its members are on the “brink of closure”.
Nearly 10,000 establishments will close on Wednesday across India’s southernmost state of Tamil Nadu, M. Ravi, president of the Chennai Hotels Association, told CNBC. He added that this would include most small and medium-sized restaurants there.
Restaurants and hotels were already facing LPG supply constraints after the government on Thursday asked domestic oil marketing companies to direct supplies to domestic consumers but did not explicitly stop supplies to hotels and restaurants.
Chandra Prakash, president of the All India LPG Distributors Federation, told CNBC that LPG distributors have now been asked to not only focus on supply to homes but also stop supply to restaurants and hotels.
Restaurants will have to find alternative fuel sources such as firewood or kerosene or switch to electric stoves, said Prakash, whose organization represents nearly 25,000 LPG distributors in the country.
LPG supply is a politically sensitive issue in India and is closely linked to Prime Minister Narendra Modi’s flagship welfare scheme, which offers subsidized LPG to the poorest households. As of November, the government had provided 103 million subsidized gas connections under the scheme.
The price of cooking gas is a hotly debated topic during the elections. Five Indian states (Assam, Tamil Nadu, Kerala, West Bengal and Puducherry) will go to the polls in the first half of 2026.
