During the COVID-19 second wave in May 2021, hospitals across India ran out of oxygen. Patients died not because treatment wasn't available — but because the oxygen to support that treatment wasn't there. In those weeks, India's industrial gases sector went from invisible to critical. The government invested billions in oxygen plants. Every hospital was mandated to have dedicated oxygen storage. And the industry's fundamental importance — previously taken for granted — became undeniable.
That crisis revealed a structural truth about industrial gases manufacturing: this is an essential input industry for every major sector of the economy. Steel plants, hospitals, chemical facilities, food processing units, semiconductor fabs, and welding operations all depend on a continuous gas supply. And in India, that supply is still concentrated in the hands of a small number of large players — with significant gaps in Tier-2 and Tier-3 locations.
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At a Glance: Starting an Industrial Gases Business in India
India Industrial Gases Market (FY2024): INR 18,500 crore (Ministry of Chemicals estimate)
Projected CAGR (2024–2030): ~9.5% (DPIIT sector analysis)
Minimum Investment (Medical Oxygen Cylinder Unit): INR 30–80 lakh
Key End-Use Industries: Healthcare, Steel, Chemicals, Electronics, Food Processing
Key Licences: Petroleum & Explosives Safety Organisation (PESO), Factory Act, Drug Licence (medical O2)
Green Hydrogen Mission Target: 5 MMT/year by 2030 (Ministry of New and Renewable Energy)
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The Case for Entering India's Industrial Gases Sector Now
India's industrial gases market is on the right side of multiple demand growth curves simultaneously, making the entry timing compelling for an informed entrepreneur.
Healthcare is the most immediate driver. Post-COVID, the government mandated that all hospitals above a certain bed capacity maintain dedicated Pressure Swing Adsorption (PSA) oxygen plants. The Ministry of Health's PM CARES Fund installed 1,500+ PSA plants, and the ongoing National Health Mission is funding 2,000 more. Each one requires cylinder filling infrastructure, which small and medium industrial gas operators can supply.
Steel and metal fabrication demand is the second pillar. India's 125 million tonne steel output (Ministry of Steel, FY2024) consumes enormous quantities of industrial oxygen and nitrogen. Every new steel capacity addition — and India is adding 30–35 million tonnes of new capacity through 2026 — creates additional gas demand in its immediate geography. A regional gas supplier located near a new steel plant can lock in long-term supply agreements before the plant commissions.
The National Green Hydrogen Mission is creating an entirely new demand category. The government has set a target of 5 million metric tonnes per year (MMT/year) of green hydrogen production by 2030 (Ministry of New and Renewable Energy). India's green hydrogen production ambition requires electrolysers and pressurisation infrastructure — creating a new equipment and services market that industrial gas companies are best positioned to serve.
Specialty gases for electronics and semiconductor manufacturing represent a premium growth segment. The government's semiconductor fab incentive (approved for four fab projects) and the PLI scheme for electronics will drive demand for ultra-high-purity nitrogen, argon, and specialty process gases that are currently almost entirely imported. This is a direct import substitution opportunity.
Food and beverage processing is an often-overlooked demand source. Modified atmosphere packaging (MAP) — which uses nitrogen or CO2 to extend food shelf life — is growing rapidly as modern retail and food delivery expands. India's food processing industry, growing at 12% annually, is a significant and growing buyer of food-grade nitrogen and CO2.
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India's medical oxygen consumption grew by 300% during the COVID-19 pandemic and has settled at 60% above pre-pandemic levels permanently — reflecting both the infrastructure investment made during the crisis and the heightened awareness of oxygen requirements in critical care (Ministry of Health and Family Welfare, post-pandemic healthcare infrastructure review, 2023).
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Market Data: Demand Volumes, End-User Breakdown, and Growth Trajectory
India's industrial gases market India is valued at approximately INR 18,500 crore in FY2024 and is projected to grow at 9.5% CAGR through 2030. The market is divided among gaseous oxygen and nitrogen (largest segment, ~45%), acetylene and welding gases (~20%), medical gases (~18%), specialty gases (~12%), and CO2 (~5%).
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Year
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Market Size (INR Crore)
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Medical Gases (INR Crore)
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Green Hydrogen (MMTPA)
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YoY Growth
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FY2020
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12,800
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1,800
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<0.01
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Baseline
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FY2021
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13,500
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3,200 (COVID)
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<0.01
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5.5%
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FY2022
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14,800
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3,400
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<0.01
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9.6%
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FY2023
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16,500
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3,600
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0.01
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11.5%
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FY2024
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18,500
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4,000
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0.05
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12.1%
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FY2027 (Proj.)
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26,000
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6,000
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1.0
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CAGR ~9.5%
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FY2030 (Proj.)
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38,000
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9,000
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5.0
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CAGR ~11%
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FY2035 (Proj.)
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62,000
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15,000
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10.0
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CAGR ~10% (assumption)
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Sources: Ministry of Chemicals and Fertilizers, Ministry of New and Renewable Energy, Ministry of Health. Projections beyond FY2024 are CAGR-based estimates.
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India's specialty gases market — covering ultra-high-purity gases for electronics, calibration gases, and laser gases — is growing at 18–20% annually but is almost 90% import-dependent (DPIIT sector note, 2024). A domestic specialty gas manufacturer with appropriate purification technology serves a market that is guaranteed to grow with India's electronics and semiconductor manufacturing ambitions.
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Government Data: Policy Investment and Industrial Gas Demand Drivers
The PM CARES Fund allocated INR 201 crore specifically for 162 PSA oxygen plants in government hospitals during the pandemic (Ministry of Health official data). The follow-on National Health Mission funding has committed to 2,000 additional PSA plants in CHCs (Community Health Centres) and district hospitals by 2025. Each of these plants requires cylinder filling support from a nearby industrial gas operator.
The National Green Hydrogen Mission's INR 19,744 crore budget (Ministry of New and Renewable Energy) will fund electrolyser manufacturing and hydrogen production infrastructure — creating direct procurement demand for industrial gas equipment and technology.
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Indicator
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Value
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Source & Year
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PM CARES PSA Oxygen Plants Installed
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1,500+
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Ministry of Health, 2022
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NHM PSA Plants Target (by 2025)
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2,000 additional plants
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Ministry of Health, 2023
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National Green Hydrogen Mission Budget
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INR 19,744 crore
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MNRE, 2023
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Green Hydrogen Production Target (2030)
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5 MMT/year
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MNRE, 2023
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India Steel Output (FY2024)
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125 million tonnes
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Ministry of Steel, 2024
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Food Processing Industry Growth Rate
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12% annually
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Ministry of Food Processing, FY2024
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Semiconductor Fab Incentive (4 projects)
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INR 1.26 lakh crore
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MeitY, 2024
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Industrial Oxygen Demand (FY2024)
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3,200 million cubic metres
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Ministry of Chemicals, estimate 2024
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Sources: Ministry of Health, Ministry of New and Renewable Energy, Ministry of Steel, MeitY, Ministry of Chemicals.
Government Schemes and Regulatory Framework for Industrial Gas Businesses
Industrial gas production and distribution is regulated by PESO (Petroleum and Explosives Safety Organisation) under the Ministry of Commerce. Every compressed gas cylinder must meet PESO registration requirements, and new gas filling stations require PESO NOC before commissioning. Understanding and completing the PESO process is the first regulatory milestone for a new gas business.
Medical oxygen production and distribution requires a Drug Manufacturing Licence from the state Drugs Controller under the Drugs and Cosmetics Act. Medical oxygen is classified as a drug, and its quality specifications are governed by the Indian Pharmacopoeia. Hospitals and medical facilities are required to source only licensed medical oxygen.
CGTMSE provides collateral-free credit guarantee for MSME-scale industrial gas businesses — oxygen cylinder filling stations, nitrogen generation units, and acetylene plants. The PLI scheme for specialty chemicals (which includes specialty gases) offers financial incentives for domestic specialty gas manufacturers who meet minimum investment and production criteria.
Import-Export Dimensions of India's Industrial Gas Sector
Commodity industrial gases — oxygen, nitrogen, acetylene — are not traded internationally in large volumes because of the high cost of transporting compressed gas. However, specialty gases (calibration gases, electronic process gases, rare gases like krypton and xenon) are actively imported. India imports specialty gases worth approximately INR 2,000–2,500 crore annually (DGFT data) — an import substitution opportunity for manufacturers capable of achieving requisite purity levels.
India also exports industrial gas equipment — cylinders, valves, regulators, and gas generators — to South Asia, Africa, and the Middle East. BIS-certified cylinders and PESO-compliant equipment are accepted across most export destinations. Indian manufacturers in the gas equipment segment compete effectively on cost against European and Japanese equipment suppliers in developing market exports.
Major Players in India's Industrial Gases Industry
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Company
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Segment & Note
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Linde India Ltd.
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Largest industrial gas company in India; all major gas categories
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Air Liquide India
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Industrial and medical gases; large plant operations
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National Oxygen Ltd.
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Industrial oxygen and nitrogen; distribution network focus
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Bhuruka Gas Ltd.
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Regional industrial gas distributor; South India focus
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Ellenbarrie Industrial Gases
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Medical and industrial oxygen; Eastern India
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Sicgil India Ltd.
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Specialty and industrial gases; Tamil Nadu-based
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INOX Air Products
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Industrial gases; joint venture; nationwide distribution
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Everest Kanto Cylinder Ltd.
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High-pressure gas cylinders; LPG and CNG cylinders
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The Growth Horizon: Industrial Gases Through 2035
India's industrial gases market is projected to reach INR 62,000 crore by FY2035 at an assumed CAGR of 10%. The green hydrogen economy will add an entirely new production and distribution layer on top of the existing commodity gases market. Green hydrogen electrolyser operations produce oxygen as a by-product — creating supply-side changes that will reshape the oxygen market geography over the next decade.
For an entrepreneur entering today, the most defensible position is regional — establish oxygen and nitrogen supply infrastructure in a geography underserved by large players (Tier-2 industrial towns, new industrial zones, districts with new hospital construction) and build long-term contracts before the market becomes crowded. The capital barrier for a regional operator is accessible; the long-term contracts create highly visible revenue.
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Consultant's Perspective
PESO registration is the most underestimated time-sink for new industrial gas entrepreneurs. The process — covering plant design approval, cylinder registration, and filling station NOC — takes 6–12 months depending on state and application completeness. Begin the PESO process the day you decide to enter this sector. Do not wait for plant construction to start. Every month lost in regulatory processing is a month of revenue foregone.
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Q&A: What Entrepreneurs Ask Before Starting an Industrial Gases Business
Q: What is the minimum investment for a small medical oxygen cylinder filling station?
A: A basic medical oxygen cylinder filling station — cylinders, manifold, compressor, quality testing — can be commissioned for INR 30–80 lakh depending on capacity. Drug Manufacturing Licence and PESO NOC are mandatory. CGTMSE-backed loans can fund a significant portion without collateral.
Q: How does PESO registration work for an industrial gas plant?
A: PESO (Petroleum and Explosives Safety Organisation) must approve the plant design, pressure vessel specifications, and safety systems before commissioning. Submit drawings and technical details to the regional PESO office. After design approval, a PESO inspector visits the plant before operations commence. Budget 6–12 months for the complete PESO process.
Q: Is green hydrogen a viable business for a new entrant?
A: Green hydrogen production at commercial scale requires significant capital and renewable power input. However, hydrogen cylinder distribution, refuelling station operation, and electrolyser maintenance services are accessible entry points for MSMEs as the green hydrogen ecosystem develops. The government's mission timeline creates a 2025–2030 window to build position.
Q: What is the market for nitrogen gas in India?
A: Nitrogen is used in food packaging (modified atmosphere), electronics manufacturing, chemical processing, and metal heat treatment. The food packaging segment alone is growing 15% annually with modern retail expansion. A nitrogen generation unit serving food processing clusters or electronics parks can achieve 70–80% capacity utilisation quickly.
Q: What quality certification is needed for medical oxygen supply to hospitals?
A: Medical oxygen must meet Indian Pharmacopoeia (IP) specifications. The filling unit needs a Drug Manufacturing Licence from the state Drugs Controller (Form 25 under Drugs and Cosmetics Act). The quality control protocol includes purity testing (minimum 99% oxygen), moisture content, and absence of toxic impurities for every batch.
Q: Are acetylene and welding gases profitable for a small manufacturer?
A: Acetylene production (from calcium carbide) and cylinder filling for the welding market is a viable MSME business in industrial zones and around fabrication clusters. The market is stable — welding demand is directly correlated with construction and auto production. Margins are consistent but not exceptional; volume and geography are the profitability determinants.
Q: How do specialty gases differ from commodity industrial gases?
A: Specialty gases are produced to extremely high purity specifications (99.999%+) for critical applications in electronics manufacturing, environmental monitoring, calibration, and medical diagnostics. They command prices 10–50x higher than commodity gases but require sophisticated production and quality assurance infrastructure. This is a capital-intensive but high-margin segment.
Q: What is the opportunity in CO2 gas for the food and beverage industry?
A: Food-grade CO2 is used in carbonated beverages, beer production, and food preservation. With India's food and beverage industry growing 12% annually, CO2 demand is growing commensurately. CO2 is often a by-product of fermentation or chemical production — entrepreneurs with access to this by-product have a significant cost advantage.
Q: What are the safety and compliance requirements for storing industrial gases?
A: PESO regulations govern compressed gas storage. Minimum safety distances from buildings and ignition sources, pressure relief systems, grounding, fire suppression, and periodic cylinder inspection are mandated. PESO district officers conduct periodic safety audits. Compliance is non-negotiable — violations result in plant closure.
Q: How do I find institutional buyers for industrial gases?
A: Steel plants, hospitals, chemical manufacturers, and food processors are the primary institutional buyers. Submit supplier qualification documents to procurement departments of nearby industrial units. For medical oxygen, empanelment with state health departments and private hospital chains provides stable volume. Industrial associations (like the Compressed Gas Association of India) facilitate buyer-supplier networking.
The Bottom Line
Industrial gases are the invisible foundation of India's economy — and the sector is entering an extraordinary demand expansion period driven by healthcare infrastructure growth, steel capacity addition, green hydrogen ambitions, and semiconductor manufacturing. The COVID-19 crisis permanently elevated awareness of oxygen supply security, and the government's response has embedded industrial gas infrastructure funding into national health policy.
The first step for a new entrant is to map the industrial and healthcare demand within a 100-kilometre radius of the proposed plant location. Identify the hospitals, industrial units, and food processing facilities that are underserved by existing gas suppliers. Then initiate PESO and Drug Manufacturing Licence applications simultaneously — both take time, and starting early is the single most important operational decision you can make.
References
1. Ministry of Health and Family Welfare — PM CARES PSA oxygen plant installation data; National Health Mission gas infrastructure programme, 2023.
2. Ministry of New and Renewable Energy (MNRE) — National Green Hydrogen Mission guidelines; production targets and budget allocation, 2023.
3. Ministry of Steel — India steel production statistics; oxygen consumption estimates for steel industry, FY2024.
4. PESO (Petroleum and Explosives Safety Organisation), Ministry of Commerce — Compressed gas plant regulations; cylinder registration; filling station NOC guidelines, 2024.
5. Ministry of Chemicals and Fertilizers — Industrial gases sector market estimates; specialty chemicals PLI scheme, 2024.
6. CDSCO (Central Drugs Standard Control Organisation), Ministry of Health — Indian Pharmacopoeia standards for medical oxygen; Drug Manufacturing Licence requirements for medical gases, 2024.
