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India CNG Market Analysis

Indias CNG market is expected to register a CAGR of more than 3% during the forecast period. In 2021, Covid-19 affected the country, and the government placed strict lockdown, drastically impacting the CNG market. The market witnessed a decline due to lower demand for CNG from the transportation industry. Furthermore, due to international restriction supply of CNG was also affected. Factors such as supportive government policies and subsidies provided by the government are likely to propel the demand for CNG in the forecast period. The rising cost of CNG is anticipated to restrain the solar inverters market during the forecast period.

Increased electric vehicle adoption is expected to restrain the CNG market in India during the forecast period.

Rising investment in Bio CNG is expected to create immense opportunities for the CNG market in the near future as the government plans to invest around INR 200 billion in bio CNG plants in the next few years.

In the last couple of years, there has been a growing awareness regarding protecting the environment; thus, individuals are shifting towards CNG as a transportation fuel to reduce the emission of harmful gases. Therefore, this ever-increasing awareness is expected to drive the market.

Demand for alternative fuel vehicles in India is on the upswing and clearly seen in the increasing sales of CNG-powered vehicles. Given the favourable price arbitrage of CNG versus petrol and diesel, retail sales of CNG vehicles, across four sub-segments, crossed the 650,000-unit mark for the first time in a fiscal in FY2023. Cumulative sales of 660,153 units (see data table below) translate into strong double-digit YoY growth of 46% (FY2022: 451,552 units).

Growing Sales of CNG powered Vehicles in India

Vehicle Segment

FY 2023 FY 2022 % Growth

Passenger Vehicle

2,26,547 40.70% 3,18,752


1,24,863 90.00% 2,41,230

Goods Vehicles

98,381 -4.00%


1,761 5,738 226.00%


6,60,153 4,51,552 46.19%

Data: Vahan

CNG passenger vehicles (PVs), with 318,752 units, account for 48% of the total retail sales in FY2023 and surged by 40.71% year on year (FY2022: 226,547 units) and took an 8.80% share of overall retail sales of 36,20,039 PVs in India.

Environmental Awareness and Regulations:

The global shift towards cleaner energy sources and reduced emissions is a significant driver for the growth of CNG Fuel System manufacturing. Stricter emission regulations imposed by governments and international bodies have led to increased demand for CNG-powered vehicles as an eco-friendly alternative.

Technological Advancements:

Ongoing research and development efforts are leading to improved CNG Fuel System technologies, including enhanced fuel storage systems, injection systems, and engine calibration. Advancements in materials science and engineering are increasing the efficiency and safety of CNG Fuel System, making them more attractive to consumers.

Cost Savings and Fuel Efficiency:

Expansion of Refueling Infrastructure:

The growth of CNG Fuel System, manufacturing is closely tied to the expansion of refueling infrastructure.

Governments, corporations, and energy companies are investing in CNG refueling stations, making it more convenient for vehicle owners to access CNG.

Fleet Adoption:

Commercial fleets, including buses, taxis, delivery vehicles, and trucks, are adopting CNG Fuel System due to their potential for substantial cost savings and lower emissions. Governments in various regions are encouraging fleet operators to transition to cleaner fuels like CNG.

Urbanization and Air Quality:

Rapid urbanization is causing air quality concerns in many cities, leading to a push for cleaner transportation options.

CNG-powered vehicles are seen as a solution to improve air quality in densely populated urban areas.

Government Incentives:

Many governments offer incentives such as tax breaks, subsidies, or grants to promote the adoption of clean energy technologies, including CNG Fuel Systems Industrys.

These incentives contribute to the growth of the CNG kit manufacturing industry.

International Market Growth:

The growth of CNG Fuel Systems manufacturing is not limited to a specific region. As awareness of environmental issues spreads, demand for CNG-powered vehicles is growing globally.

Countries with a strong focus on sustainability and reducing carbon emissions are driving the demand for CNG Kits.

Collaboration and Partnerships:

Manufacturers of CNG Fuel are collaborating with automakers, energy companies, and research institutions to develop integrated solutions that maximize the benefits of CNG technology.

Partnerships are enhancing the overall value proposition of CNG vehicles.

Public Awareness and Education:

As consumers become more informed about the environmental and economic benefits of CNG-powered vehicles, demand for CNG Fuel is likely to increase. - Public awareness campaigns and educational initiatives contribute to the growth trend.

Overall, the growth trends for the business of manufacturing CNG Fuel System components are fueled by a combination of environmental concerns, technological advancements, cost savings, regulatory support, and increased consumer awareness of cleaner and more sustainable transportation options.


Post disruptions related to COVID-19, a series of measures were taken by the government to improve economic activity and convert pandemic-led disruption into an opportunity for growth. These key measures primarily included the Atmanirbhar Bharat package and the introduction of Production Linked Incentive (PLI) Scheme executed through various Ministries. The Union Budget 2023-24 has allocated nearly 8,083 crores under the

Production Linked Incentive Scheme. It has also allocated 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security. The Economic Survey 2023-24 is optimistic about overall macro-economic stability of the Indian Economy and for her to remain the fastest growing major economy in the world.