**8. Impediments for natural gas market growth**

For a long period impediments like insufficient infrastructure for the import of natural gas, low cross-country pipeline penetration, and lack of costcompetitiveness of natural gas hampered market growth in India. Despite rising environmental concerns and lower emphasis on polluting fuel, natural gas faces continued challenges from coal. Further, falling renewable electricity price challenges natural gas's cost competitiveness. The high cost of imported LNG becomes a dampener for power plants to use natural gas. Insufficient availability of domestic natural gas does not offer any hope for the stranded power plants. The Standing Committee on Energy (2020–2021) in its eleventh report pointed out that change in domestic gas allocation policy adversely impacted the stranded power plants. This committee observed that the gas-based power plants which developed based on assured domestic gas supply are unviable on imported R-LNG [19]. High R-LNG price, which is at times twice the price of domestic gas is not sustainable for power plants. Therefore, most of the natural gas-stranded power plants are stressed assets.

### *Role of Natural Gas in India: Recent Developments and Future Perspectives DOI: http://dx.doi.org/10.5772/intechopen.101346*

The ministry of power stated that the unit cost of power produced from imported R-LNG was around Rs.7/kWh [19], which was expensive compared to coal and renewable power. Solar-based power cost has declined to a record low of Rs 2/ kWh, which is comparable to coal-based electricity cost.

Natural gas has been kept outside the purview of goods & services tax (GST), which is an impediment for growth of the sector. Various industry bodies including the Federation of Indian Petroleum Industry recommend bringing natural gas under the ambit of GST [20]. The current tax regime allows states to levy varying amounts of value-added tax, which goes against "one nation one tax" philosophy. Further, buyers of natural gas do not get input credit, consequently, it adds up to the production cost of the industrial customer.

Lack of sufficient cross-country pipeline network remains a major impediment for natural gas market development. The pipeline network has better connectivity in the west coast compared to eastern and north-eastern India. However, the government has taken several steps to build pan-India natural gas pipeline network.
