Industries across Karnataka are facing disruptions as a shortage of commercial LPG cylinders forces several units to cut production and, in some cases, temporarily shut operations. The supply constraints are linked to global fuel disruptions triggered by the Iran war.
Manufacturers, fabrication units and small businesses say distributors have stopped supplying commercial cylinders for nearly a week as available stocks are being prioritised for domestic consumption.
Industry representatives warn that the shortage is already affecting production schedules, with some factories operating in reduced shifts and others suspending operations altogether.
Factories forced to shut
Aruna Urs, co-founder of Mysuru-based Huli, India’s first jaggery-based rum brand, said the company will halt operations from Monday after failing to procure LPG required to run its boiler.
“Huli will be closed from Monday as we are unable to procure LPG for our boiler. Our LPG supplier told us they have been instructed to refill only domestic cylinders,” Urs told Moneycontrol.
The company had adopted LPG as its primary fuel as it burns cleaner and helps industries comply more easily with pollution control norms.
“LPG is the cleanest fuel from the pollution control board’s perspective. Now that supply has stopped, we have no option but to shut the factory until gas supplies are restored,” Urs said.
She added that switching to an alternative fuel such as diesel would require modifications to the existing gas-fired boiler and fresh approvals from the Karnataka State Pollution Control Board.
“That would involve additional capital expenditure and regulatory approvals, and it could take two to three months. It cannot be done overnight,” she said.
Also, read: Goodbye dosa, hello sandwiches: Bengaluru restaurants turn to ‘jugaad’ amid LPG crisis
Fabrication, foundry units hit
Industrial associations say the shortage is affecting a wide range of sectors, particularly fabrication and metal-processing units that depend heavily on LPG for operations such as gas cutting and heat treatment.
U Sathyanarayana, council member of Peenya Industries Association (PIA), said many units have not received cylinders for the past week.
“LPG dealers and distributors have stopped taking calls because there is no supply. LPG is essential for fabrication, metal cutting and heat treatment. In many industries, at least one or two processes depend on it,” he said.
According to Sathyanarayana, around 30 percent of units in the Peenya industrial cluster have already been affected by the shortage.
“Many factories are now working shorter shifts and reducing production. With the financial year-end approaching, we are unable to meet our targets or commit delivery timelines to customers,” he said.
The shortage is also affecting small businesses. A sports and gifts shop in Balepet said it has stopped producing 3D-embossed medals for shields and trophies due to the lack of LPG cylinders.
Industry bodies seek intervention
Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has also flagged supply constraints affecting businesses. FKCCI president Uma Reddy told Moneycontrol that hotel industry has been among the worst affected by the LPG shortage.
“The hotel industry is one of our key member sectors and represents a large number of businesses. We have already highlighted the concerns of the hotel and food industry and written to Karnataka Electricity Regulatory Commission (KERC) requesting that penalties for higher power consumption be waived if hotels switch from LPG to electric cooking during this shortage,” she told Moneycontrol.
According to Reddy, hotels switching to electric cooking would need to invest in induction stoves and may face higher electricity tariffs once their consumption crosses allotted slabs. “We have requested KERC to allow hotels to use additional power at the normal tariff temporarily until LPG supply stabilises,” she said.
Reddy added that the larger concern for industry could be rising freight and raw material costs. “Many small three-wheelers used for goods transport run on LPG. If they shift to petrol or diesel, freight costs will increase, which will push up raw material prices and impact MSMEs,” she said.
She also warned that global shipping disruptions could raise the cost of importing critical raw materials. “Some materials such as steel, copper, rare earth materials and magnets may have to be transported by air instead of sea to avoid delays. But air freight can cost nearly 20 times more than sea freight, which will significantly increase input costs and reduce margins,” she said.
Separately, FKCCI has written to Hindustan Petroleum Corporation Limited (HPCL) after receiving complaints from dealers about fuel distribution.
Also, read: Indane LPG refill booking system crashes after calls surge 8-10 times
“We received representations from HPCL dealers stating that there is no transparent mechanism for fuel distribution and that some outlets are receiving more supply while others are facing shortages. In some places, petrol pumps are shutting by evening due to lack of fuel,” Reddy said.
Gas supply curbs may hit power generation
Separately, a state government official said power generation in Karnataka could also be affected after the Centre prioritised natural gas supply to key sectors during the current fuel shortage.
Under the Natural Gas (Supply Regulation) Order, 2026, domestic PNG, LPG production, CNG for transport and essential pipeline operations have been placed in the top priority category, while power generation has been placed last.
Following the order, Gas Authority of India Limited (GAIL) stopped gas supply to the 370-MW Yelahanka gas-based power plant, operated by Karnataka Power Corporation Limited (KPCL), from 6 am on March 12. The facility is the state’s only gas-based power plant.
Also, read: LPG price hikes worry ride-hailing drivers; unions warn of supply disruption, income hit
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