LPG Production in India: Centre Orders Refiners to Maximise Output

Context:
The Centre invoked the Essential Commodities Act, 1955 to direct refiners to prioritise LPG production for domestic cooking needs amid supply concerns linked to West Asia disruptions.

Key Data

• Government ordered refiners to maximise LPG production and prioritise domestic supply.
• Refiners instructed not to divert propane–butane streams for petrochemicals or other derivatives.
• LPG is mainly a mixture of propane and butane.
• Production can be increased by rebalancing refining streams.

• Around 60% of India’s LPG is imported, mainly from Persian Gulf countries such as Saudi Arabia and Qatar.
• Domestic refineries produce roughly 40% of India’s LPG requirement.
• Disruption in the Strait of Hormuz may affect LPG imports and logistics.

Essential Commodities Act — Provision Used

• Action taken under Section 3 of the Essential Commodities Act, 1955.
• Section 3 empowers the Centre to regulate production, supply, distribution and pricing of essential commodities to ensure availability and prevent hoarding.

India GCC Trade: West Asia Tensions Threaten Gem and Jewellery Sector

Context:
Escalating West Asia tensions threaten India’s gem and jewellery trade through supply disruptions, demand shocks and rising logistics costs linked to GCC markets.

1. India–GCC Trade (Gem & Jewellery — Key Data)

• GCC supplies 30%+ of India’s gem and jewellery imports (raw materials and precious metals).
• Imports from GCC increased from $16 billion (FY22) to $28 billion (FY25).
• India’s exports to GCC rose from $5.1 billion (FY22) to $8.3 billion (FY25).
• GCC accounts for over 50% of India’s gold jewellery exports.
• UAE serves as a major hub for gold bars, bullion and rough diamonds, with Dubai acting as a global diamond trading centre.

2. India–GCC Overall Trade

• FY 2024–25 bilateral trade ≈ $178.56 billion

• Exports: $56.87 billion
• Imports: $121.68 billion

• GCC accounts for about 15.4% of India’s global trade.
• GCC is one of India’s largest regional trade partners, led by UAE and Saudi Arabia.

3. Gulf Cooperation Council (GCC)

• Established in 1981.
• Members: Saudi Arabia, UAE, Qatar, Kuwait, Oman, Bahrain.
• Focus areas include economic integration, energy cooperation, trade and security coordination.

West Asia Conflict: Risks to India’s Core Industries and Raw Material Supply

Context:
The ongoing West Asia conflict risks disrupting several critical industrial inputs for India, beyond oil and gas.

Key Raw Materials at Risk

• Limestone
• Gypsum
• Sulphur
• Direct reduced iron (iron produced from ore without melting)
• Copper wires

Key Points

• Import dependence from West Asia is significant:

• Limestone: 68.5%
• Gypsum: 62.1%
• Sulphur: 65.8%
• Direct reduced iron: 59.1%

• More than 40% of India’s rough diamonds are sourced from the region for processing and export.
• Disruptions in the Strait of Hormuz could increase logistics costs and delay supplies.
• Industries likely affected include steel, fertiliser and construction sectors.