India Unlocks 12 Crore Homes as CNG Network Expands Rapidly
India’s transition towards a cleaner energy ecosystem has received a significant push, with compressed natural gas (CNG) emerging as the cornerstone of the country’s city gas distribution expansion strategy. As per the latest ‘City Gas Pulse’ report by Crisil Market Intelligence, India has unlocked access to cleaner fuel alternatives for nearly 12 crore households through a series of progressive city gas licensing rounds.
The outcome is a notable acceleration in infrastructure development, supported by public-private partnerships, rising vehicle conversions, and growing urban demand for sustainable mobility solutions. The report identifies CNG as a transformative fuel poised to define the next leg of India’s urban energy journey. With over 18,000 CNG stations proposed across various geographies and increasing private sector enthusiasm, the sector reflects India’s commitment to cleaner, greener, and more equitable energy access. Crisil analysts attribute this momentum to evolving gas-allocation models, strategic investments in pipeline infrastructure, and regional readiness to absorb low-emission technologies.
Fuelled by India’s long-standing ambition to increase the share of natural gas in its primary energy mix to 15 per cent, city gas distribution (CGD) is now pivotal in aligning energy consumption with climate-conscious planning. While India currently relies heavily on coal and oil to meet its energy needs, CNG’s rapid adoption represents a tangible shift towards decarbonisation and energy security. Much of the present expansion is being driven by the exponential growth of urban mobility and the increasing number of vehicles converting from petrol and diesel to CNG. This shift is particularly evident in metros like Delhi, Mumbai, and Ahmedabad, where environmental consciousness is accelerating transitions in both public and private transport sectors.
With the exclusivity periods for several earlier CGD licensees nearing closure, competition in the sector has intensified. New entrants are targeting underserved regions with improved last-mile connectivity and innovation-led delivery models. As state-backed distribution entities and private players race to expand their network, the CGD sector is experiencing a healthy churn that favours consumer access, affordability, and efficiency. Crisil’s findings underline that traditional CGD markets will remain dominant for now, but the next wave of growth is likely to come from newer regions—particularly Tier-2 and Tier-3 towns. These regions are fast emerging as demand hubs, facilitated by favourable policy frameworks and the Government’s increased emphasis on energy decentralisation.
The transition, however, is not without its structural challenges. Experts point to gaps in pipeline connectivity, uneven geographical development, and the need for more robust last-mile delivery mechanisms. Yet the government’s sustained push—manifested in GAIL’s investment plans and the Petroleum and Natural Gas Regulatory Board’s (PNGRB) policy updates—is expected to address these concerns incrementally. India’s evolving energy landscape is also shaped by its international commitments. At the COP26 climate summit in 2021, India pledged a “Panchamrit” agenda that includes achieving 500 GW of non-fossil fuel capacity, fulfilling half of energy needs via renewables, and cutting emissions intensity by 45 per cent by 2030. The transition to gas-based fuels like CNG is crucial to realising these pledges.
In this context, CNG offers multiple advantages—it is cleaner than coal and petrol, cheaper to use in transport, and easier to deploy in cities where infrastructure is maturing. Moreover, CNG plays a critical role in reducing particulate matter and improving air quality, aligning with health and environmental goals that urban centres increasingly prioritise. One of the most impactful developments noted by Crisil is the shift in investment patterns. As exclusivity wanes and more geographies open up, infrastructure gaps are being selectively bridged. This has led to more decentralised planning where CNG distribution is no longer limited to traditional urban corridors but extends to newer, underserved regions.
There is also a gender and equity angle to this growth story. Cleaner household cooking fuel access, safer work environments in the CGD sector, and improved affordability for low-income urban families are all cascading benefits of a broader city gas network. Experts argue that an inclusive expansion strategy can advance gender-neutral outcomes while aligning with India’s net-zero goals. The CGD sector’s potential lies not just in the fuel it delivers, but in the lives it transforms. As India urbanises, expanding access to sustainable fuel will be essential to build cities that are climate-resilient, socially inclusive, and economically robust. The convergence of policy direction, infrastructure readiness, and market interest signals that the city gas push may become one of India’s most significant clean energy transformations.
As regional players ramp up CNG infrastructure, and as private capital continues to flow into urban energy networks, India’s CGD sector is poised to grow not just in volume but in impact. The government’s clear focus on decentralised, zero-carbon solutions provides the framework, while the expanding appetite for cleaner energy sources gives the momentum.
In the coming years, the true measure of success will lie in how equitably this access is distributed—across towns, households, and income segments—and how efficiently it complements India’s broader climate commitments. The journey may be complex, but with CNG and city gas now at the centre, it is a step in the right direction.
