Picture a big fertiliser plant in Gujarat. It runs on natural gas every single day, and it knows exactly how much it will need next year. So where does it buy that gas?
For a long time, the answer wasn't "the gas exchange." The Indian Gas Exchange (IGX) was mostly a place for last-minute shopping. Suppliers could sell gas on it for durations ranging from daily to weekly, fortnightly and monthly. That's handy if you're short on gas this week. But if you want to plan a whole year of production, you'd normally sign a private deal directly with a supplier, away from the exchange.
That's what the regulator, PNGRB, has now changed. IGX can offer 1-year and 2-year contracts. Buyers can choose a fixed price, in rupees or dollars, locked in on day one. Or they can pick a price linked to Brent crude, which is how most long-term LNG deals around the world are priced anyway.
In short, IGX wants to be the place you plan your gas buying, not just where you top up.
So why does this matter for IGX?
An exchange earns money the way a toll booth does: a small fee on every unit that passes through. More gas traded means more revenue.
This is where long contracts get exciting. A single one-year deal for 1 million standard cubic metres of gas a day adds up to roughly 13–14 million MMBtu over the year. Now compare that with IGX's scale. It traded a record 60 million MMBtu in FY25. So just one mid-sized annual contract could add about a fifth of a full year's volume. A handful of them could change IGX's numbers noticeably.
And IGX is already growing without them. Its revenue from operations rose from ₹48.8 crore in FY25 to ₹61.05 crore in FY26.
But here's the catch
IGX has tried longer contracts before, and the response was lukewarm. It launched 3- and 6-month contracts in early 2025. Months later, its CEO admitted the response had been only average, with just one trade each for the three- and six-month contracts in the six months after launch.
Why so few? Big buyers are used to private long-term deals, and changing habits takes time. There's a twist, though. When IGX consulted the market, participants said what they really needed was one-year contracts. So this approval gives the market what it said it wanted. Whether buyers actually show up is the real test.
There's one more detail worth knowing. Longer contracts may carry lower fees per unit. PNGRB's consultation papers discussed reducing the exchange fee from its present Rs 4 per MMBtu. So IGX may earn a bit less on each unit, but it could make up for that with much bigger deals.
And what about IEX?
IGX is a venture of Indian Energy Exchange, which owns more than 47% of it but must bring that down to 25% through IGX's upcoming IPO. For IEX, this news matters less as an earnings boost and more as something that could make IGX look more valuable right before the IPO.
The bottom line
This approval gives IGX a shot at becoming a real market for planned gas buying in India. The potential is big, but the proof will be in the trading numbers. If 1- and 2-year contracts start filling up over the next few quarters, IGX's growth story gets a lot more convincing. If they end up like the 3- and 6-month contracts, it stays a promising idea.
Until then, keep an eye on those volume numbers.
This isn't investment advice.