Moneycontrol Pro Panorama | Iran war’s first shock to India is in the kitchen

Iran war

Dear Reader,

So, the first signs of the Iran war reaching India are not visible merely in stock markets or foreign policy statements. They are also visible in restaurant kitchens.

Going by reports, across cities such as Bengaluru, Chennai and Mumbai, hotels and eateries have begun reporting a sudden shortage of commercial LPG cylinders, forcing some to cut menu items and others to consider temporary closures.

Further, industry bodies have warned that if the disruption persists, a significant portion of the hospitality sector could face operational stress.

It is not only the LPG shortage, there are reports that suggest that prices for 19-kg commercial LPG cylinders climbing to around Rs 2,100–Rs 2,300, compared with roughly Rs 1,850 earlier and about Rs 1,650 a month ago.

Not a local problem

The immediate trigger for this shortage lies thousands of kilometres away, in the escalating conflict involving Iran and the disruption of shipping routes around the Persian Gulf. Do read this piece by colleague Shishir Asthana on the gas crisis in India.

How did we come to this point?

The Strait of Hormuz is one of the world’s most critical energy chokepoints. Roughly a fifth of global oil shipments move through this corridor.

Ever since Iran restricted this channel for ships, global energy markets reacted instantly, pushing up oil and gas prices and interrupting supply chains.

Logically, India, which imports nearly 85 per cent of its oil needs, felt the impact quickly. Any disruption in shipping routes or export flows from West Asia quickly tightens domestic availability.

Crisis management:

The government’s immediate response has been predictable and understandable. Domestic LPG supply for households has been prioritised, leaving commercial consumers--hotels, restaurants, offices and food businesses-- facing shortages.

In some cases, distributors have been asked to limit supply only to essential services such as hospitals and educational institutions.  This is a logical response indeed. But, if the shortage deepens, supply to households too can be hit.

Cooking gas for households is a sensitive issue. Ensuring uninterrupted domestic supply is non-negotiable for any government.

If hotels shut down, it can also lead to higher unemployment in the informal sector.

The restaurant industry is a major employer to millions of workers. Commercial kitchens rely heavily on large LPG cylinders for continuous cooking. When supplies tighten even for a few days, operations become difficult.

Reports suggest that some restaurants have already reduced cooking hours, limited slow-cooked dishes and switched partially to electric induction stoves to keep their kitchens running.

For smaller eateries and street vendors, the situation is even more troublesome. Many operate with very little LPG stock and thin margins. A few days of supply disruption can translate into immediate loss of income.

The lesson

The crisis unfolding now is also a warning about a larger structural vulnerability in India’s energy system. The country has made enormous progress in expanding access to clean cooking fuel over the past decade.

Yet that progress has also increased dependence on LPG imports. More than half of India’s LPG consumption is linked to imports, exposing the country to global shocks.

The immediate crisis may pass if shipping through the Gulf stabilises and supplies resume. Oil companies have already been asked to ramp up LPG production and divert additional supplies to the domestic market.

Crises such as the current one show us why India need to reduce reliance on imports from a single region and seek diversified energy sources, expand piped natural gas networks and, more importantly, encourage electric cooking alternatives. There is an opportunity to rethink in every crisis.

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Dinesh Unnikrishnan Moneycontrol Pro