Air pollution remains a severe public health challenge in North India, especially during the winter months. Several cities in the region regularly feature among the world’s top ten most polluted, with vehicular emissions ranking high among the contributing factors.

To address this, the Indian government has been promoting compressed natural gas (CNG) as a cleaner fuel alternative. Initially concentrated in regions with an established refuelling infrastructure - Delhi-NCR, Mumbai, and Gujarat - CNG vehicles are now finding broader acceptance as fuelling stations expand into more states.

The Indian government has also laid out an ambitious plan to raise the share of natural gas in India’s energy mix to 30% by 2030, up from the current 6-7%. As part of this strategy, it has set a target of establishing 18,336 CNG stations across the country by 2032. Currently, there are around 8,000 operational stations under the city gas distribution (CGD) network, which includes both CNG for vehicles and piped natural gas (PNG) for residential, commercial, and industrial use.

According to The Economic Times, CNG-powered vehicles are seeing increased uptake amid persistently high petrol and diesel prices. Despite sluggishness in the auto market in India, the share of CNG cars in overall passenger vehicle sales increased from 6.3% in FY20 to 19.5% in FY25, overtaking diesel car sales.

As also eported by The Economic Times, petrol cars saw a marked decline in market share - from 76.3% to 57.7% over the same period - while diesel sales remained steady at around 17-19%, the Society of Indian Automobile Manufacturers (SIAM) data showed. CNG car sales are expected to cross the 1mn mark in FY26, reflecting a 20% rise over the 839,000 units sold in FY25. In contrast, total passenger vehicle sales are projected to grow by just 1-2% during the same period.

This shift in consumer preference has caught even automakers by surprise. Tata Passenger Electric Mobility’s chief commercial officer, Vivek Srivatsa, noted that the segment is expanding rapidly, fuelled by improved availability. The Economic Times reported that while the taxi segment continues to account for about one-fifth of CNG car sales, the surge is now being driven predominantly by individual buyers.

The upswing has been supported by a wider model range and an expanding network of fuelling stations. Accordingly, the number of CNG vehicle models available in India more than doubled from 11 in FY21 to 25 in FY25. Carmakers including Maruti Suzuki, Hyundai Motor, Tata Motors, and Nissan have all broadened their offerings to cater to this growing market.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri recently stated that the number of CNG retail outlets has increased twenty-fold over the last decade. The government now targets 17,500 CNG pumps by 2030, up from 7,400 in 2025.

While the government continues to incentivise electric vehicles (EVs) as part of its decarbonisation strategy, CNG remains the more accessible option for many buyers. The lower upfront cost of CNG vehicles, combined with an extensive fuelling infrastructure, continues to tip the balance in their favour. Despite the promise of low running costs, EV adoption still faces challenges such as higher acquisition prices and inadequate charging infrastructure.

One commonly cited drawback of CNG cars - reduced boot space due to the bulky cylinder - is also being addressed. Tata Motors and Hyundai, for instance, have introduced twin-cylinder designs that preserve luggage space without compromising fuel capacity.

Saurabh Vatsa, managing director of Nissan Motor India, told The Economic Times that with diesel restrictions from the National Green Tribunal extending beyond Delhi-NCR, consumers are now shifting decisively towards cleaner alternatives. In May, Nissan rolled out a government-certified CNG retrofit kit for its passenger car range. Vatsa highlighted the need to align eco-friendly mobility solutions with cost-effectiveness. Some of the top-selling CNG models currently available in India include the Maruti WagonR, Hyundai Exter, and Tata Punch.

 Maruti Suzuki’s chairman, R C Bhargava, recently said the company sold over 600,000 CNG units last year and is targeting sales of around 700,000 units in the current fiscal.

According to Tarun Garg, COO of Hyundai Motor India, CNG has now emerged as the preferred fuel choice for budget-conscious consumers, particularly in the sub-INR1.1mn price segment. About 33% of Hyundai vehicles sold in the country today is powered by CNG.

Sustainable transportation, CBG and CNG blending

India introduced the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative in 2018. The programme aims to build a robust ecosystem for producing compressed biogas (CBG) from agricultural residues, municipal solid waste, and other biomass sources, and to integrate its use alongside conventional natural gas.

As part of efforts to scale-up CBG production and utilisation, the National Biofuels Coordination Committee (NBCC) approved a phased introduction of mandatory blending of CBG into CNG for transport and piped natural gas (PNG) for domestic use. This approval, granted in November 2023, outlines a gradual transition toward compulsory blending.

During the initial phase, blending will remain voluntary until the end of FY 2024-25. From FY 2025-26, blending obligations will become mandatory, beginning with a 1% CBG share in the total CNG and PNG volumes. The mandate will increase to 3% in FY 2026-27, 4% in FY 2027-28, and will stabilise at 5% from FY 2028-29 onwards.