Centre Invokes Essential Commodities Act to Boost LPG Supply Amid Oil Crisis

In response to the oil crisis triggered by the escalating conflict involving Israel, the United States, and Iran, the Government of India invoked the Essential Commodities Act, 1955 (ECA) on March 5, 2026, directing oil refining companies to maximise production of Liquefied Petroleum Gas (LPG) and prioritise its supply for domestic consumers.

Key Directions Issued

Under the order:

• Oil refining companies must increase LPG production and ensure its availability exclusively for domestic consumption.
• Refineries are prohibited from diverting propane or butane streams—key components of LPG—for the manufacture of other petrochemical products.
• Indian Oil Corporation, Bharat Petroleum Corporation Limited, and other Oil Marketing Companies (OMCs) have been instructed to supply LPG solely for household and domestic use.

The directive invokes Sections 3 and 5 of the Essential Commodities Act, which empower the Centre to regulate production, supply, and distribution of essential commodities, including setting limits for refining and marketing companies.

About the Essential Commodities Act

The Essential Commodities Act, 1955 has historically been used by the government to:

• Control rising prices of essential goods
• Prevent hoarding and black marketing
• Ensure food and supply security

2020 Amendments

In 2020, Parliament amended the Act to limit the Centre’s regulatory powers over certain agricultural commodities such as cereals, pulses, potatoes, onions, edible oilseeds, and oils. Regulation can now be invoked only under extraordinary circumstances, including:

• War
• Famine
• Extraordinary price rise
• Natural calamities of a grave nature

The amendment also introduced price-triggered stock limits:

• 100% rise in retail prices of horticultural produce
• 50% rise in retail prices of non-perishable food items

Continued Use of the Act

Despite the amendments, the Centre has invoked the ECA five times since 2020, imposing measures such as stock limits on cereals and wheat and restrictions on sugar exports to manage domestic supply and control price volatility.

Source: TH