Surge in CNG Adoption Fuels Growth for CGD Sector

CNG adoption is accelerating across India, with Mahanagar Gas and Gujarat Gas leading growth amid EV headwinds and expanding CGD infrastructure.

India’s City Gas Distribution (CGD) sector is experiencing a transformative phase, with CNG adoption driving substantial growth. As the world grapples with the challenges of electric vehicle (EV) penetration, especially in the mass market, the CGD ecosystem is emerging as a key beneficiary. Rising CNG demand, supported by favorable cost economics and expanding infrastructure, is giving CGD companies like Mahanagar Gas and Gujarat Gas a solid growth trajectory.

CNG’s Rise Amidst EV Challenges

While EVs remain a key part of India's future mobility strategy, their mass adoption faces headwinds. Global policy tapering and supply chain bottlenecks have slowed EV growth, creating an opportunity for CNG vehicles to fill the gap. The CNG sector has benefitted from better unit economics, accessible pricing, and a rapidly developing infrastructure network. In FY25, CNG powertrain growth in India surged by 35%, with CNG vehicles now making up 25% of certain OEMs' portfolios. This trend is expected to continue, further establishing CNG as a strong contender in the Indian automobile market.

Also Read: PNGRB Urges Shift to Electric Motor-Driven Compressors Across 25,429-Km Gas Pipeline Network

Government Support and Strategic Expansion

The Indian government’s role in the CGD sector is crucial, particularly with the ongoing expansion of the CNG network into tier-2 and tier-3 cities. Along with policy incentives for cleaner mobility, this expansion is expected to keep demand robust. Gujarat Gas and Mahanagar Gas are set to benefit from these developments, especially as CNG becomes a more mainstream alternative to traditional fuels. The continued focus on infrastructure, along with rising OEM alignment, ensures a bright future for these CGD companies.

With solid fundamentals and a growth trajectory driven by CNG demand, Mahanagar Gas and Gujarat Gas are well-positioned to deliver strong returns, reinforcing the sector's long-term potential in India's evolving energy landscape.