A new PwC report has sounded a cautionary note on India's natural gas market, questioning whether current exchange-based price discovery can truly anchor long-term investments in pipelines, LNG terminals, and power generation.

At the heart of the analysis is a liquidity gap. While the Indian Gas Exchange (IGX) has shown growth, reporting 6.23 million MMBtu (≈157 MMSCM) of trades in August 2025, this represents only about 2–3% of India's monthly system consumption, according to PPAC data. For comparison, India's system gas burn stood at ~5,900 MMSCM in May 2025 and ~5,382 MMSCM in June 2025. Such shallow volumes, PwC argues, are insufficient to provide the "bankable" price signals that multi-year capex projects require.

The report also highlights structural weaknesses in forward trading. IGX introduced longer-tenor contracts (3–6 months) only this year, with the first deal struck in April 2025. While a step forward, PwC cautions that this tenor remains inadequate to underwrite 10–20 year midstream and power investments, particularly when trading depth is still emerging.

Midstream infrastructure under-utilisation further undermines credibility. With multiple LNG terminals running below 50% utilisation in FY2025 and pipeline utilisation hovering around 41% (IEEFA), shallow physical flows limit the robustness of any exchange-derived benchmark.

PwC also notes ongoing frictions in pipeline access. Despite a national access code, scheduling and nomination rules remain cumbersome, particularly for smaller buyers. This hinders fluid short-term trading and prevents the creation of a seamless "gas-as-a-service" market.

Looking ahead, India's gas demand is projected to climb nearly 60% by 2030, with rising LNG dependence. Yet, exposure to volatile spot LNG prices—ranging between $8–$18/MMBtu in recent months—continues to erode confidence in market-based signals. The report stresses that unless liquidity at longer tenors, transparent capacity release, and real-time utilisation data improve, exchange pricing will remain "indicative rather than investable."

PwC outlines four key enablers:
Market-maker schemes to ensure liquidity at longer maturities.
Standardised, near real-time capacity release for pipelines and terminals.
Development of hedge products linked to global benchmarks (JKM, Brent).
Daily publication of utilisation and flows on a unified bulletin board.

Bottom line: India's gas market is on the right path, but without deeper volumes, robust forward curves, and frictionless midstream access, "market-based" pricing risks staying "mark-to-myth."

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