In an effort towards enabling gas market and fostering gas trading in the country, the government has launched India’s first gas exchange – the Indian Gas Exchange (IGX). The exchange will be the first such platform in the country for local market price discovery through demand-supply matching in a transparent way. Incorporated as a wholly-owned subsidiary of the IEX, the IGX will enable market participants to trade in standardized gas contracts. It will provide a fully automated web-based interface to customers for seamless trading experience.

During the virtual launch ceremony, Prime Minister Narendra Modi said that the launch of the new electronic trading platform for natural gas today will help the nation move towards “free-market pricing of natural gas”. IGX will play a bigger role in realizing a free market for gas, he added, as there will be a market-driven pricing mechanism. The IGX is a digital trading platform that will allow buyers and sellers of natural gas to trade both in the spot market and in the forward market for imported natural gas across three hubs – Dahej and Hazira in Gujarat, and Kakinada in Andhra Pradesh.


How will this exchange work?

The Indian Gas Exchange, the online gas trading platform will act as a subsidiary of Indian Energy Exchange and it will be the first online gas trading platform for physical delivery of natural gas. The trading of natural gas in the platform is to be done in rupees. The minimum lot size allotted is 100 million British Thermal Unit (MBTU).

Domestically produced natural gas currently accounts for less than half the country’s natural gas consumption; imported LNG accounts for the other half. LNG imports are set to become a larger proportion of domestic gas consumption as India moves to increase the proportion of natural gas in the energy basket from 6.2% in 2018 to 15% by 2030.

Why is the Indian Gas Exchange needed?

An official of IGX stated that an independent system operator for natural gas pipelines would help ensure transparent allocation of pipeline usage, and build confidence in the minds of buyers and sellers about neutrality in the allocation of pipeline capacity. Like other exchanges, IGX is expected to play a big role in competitive price discovery for the natural gas that will come from different parts of the globe and from within India. The competitive price discovery will facilitate the availability of gas at lower prices for the cross-spectrum of industries across India, stimulate demand and facilitate greater investments in domestic gas exploration.