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India has a substantial amount of proven natural gas reserves which make it a very lucrative operating scenario for domestic as well as foreign players. Although a major portion of these gas reserves are located in the western part of the country, both onshore and offshore reserves have been discovered in other regions as well. The available gas can be broadly categorized into liquid natural gas (LNG) and compressed natural gas (CNG). The main difference between the two categories is that while LNG is transported through pipelines to homes and business units, CNG can be transported through pressure vessels. The power generating sector and the fertiliser industry are two of the largest consumers of natural gas in India. City-based individual households and industrial units comprise other groups of consumers.

However, the natural gas industry faces a lot of challenges. The product is not a renewable resource which makes it less attractive in the current situation, when alternative sources of energy have become important. Secondly, the Indian market is a very price-sensitive one, which leads to stiff competition. Lastly, transportation and infrastructural problems also act as deterrents to the further development of this industry.