Compressed Natural Gas (CNG) is set to play a central role in India’s energy transition, with the city gas distribution (CGD) sector poised for significant growth, according to a recent report by Crisil Market Intelligence and Analytics.
Crisil attributes this projected expansion to a combination of strong government support, rising urban mobility needs, and the ongoing development of supporting infrastructure. With over 18,000 CNG stations planned and access to nearly 12 crore households enabled through recent licensing rounds, the sector is gaining momentum.
“While demand continues to be anchored by the leading states, the next wave of growth is expected to come from newer regions,” the report, titled City Gas Pulse, noted. It highlights factors such as evolving gas allocation patterns, increased private sector investments, and a growing trend of vehicle conversions as key enablers.
At the same time, the CGD sector is witnessing rising competition, as exclusivity periods for operators draw to a close and infrastructure development proceeds at a selective pace to bridge existing gaps.
The City Gas Pulse report provides a detailed, state-wise and company-wise analysis of how CNG demand is evolving, the pace of infrastructure rollout, and where investment is being concentrated. It also assesses how prepared various regions are to support the continued growth of the sector.
India is aiming for natural gas to comprise 15% of its primary energy mix, and CNG is increasingly seen as a critical part of that strategy. Crisil points out that the expansion of CGD coverage areas and the push for cleaner transport options are positioning CNG as a sustainable and competitive alternative to conventional fuels.
“Regional infrastructure readiness is a key factor in expanding access to gas, even as attention grows toward electric mobility,” the report stated. It also noted that CNG continues to remain economically viable, despite evolving pricing dynamics and allocation challenges.
India still relies heavily on fossil fuels to meet its energy demands, but cleaner alternatives like CNG are being increasingly adopted to reduce that dependence. The shift aligns with India’s broader commitment to sustainable energy and climate goals.
At the 2021 United Nations Climate Change Conference (COP26), India announced a five-part “Panchamrit” strategy, including goals such as achieving 500 GW of non-fossil electricity capacity, meeting 50% of energy needs through renewables, and reducing projected emissions by 1 billion tonnes by 2030. India has also pledged to cut the emissions intensity of its GDP by 45% and achieve net-zero carbon emissions by 2070.
