GAIL India has begun placing orders for a 345 km pipeline from Phulpur to Dobhi, phase 1B of multiple phase $2 billion pipeline construction project from Jagadishpurto to Haldia-Bokaro-Dhamra.

The pipeline will help connect energy-deprived eastern Indian states to each other and to the national grid. And for the first time, the government in New Delhi said it was committed to covering about 40 percent of the capital investments needed to build such natural gas links in the country.

"This capital grant will encourage the supply of eco-friendly fuel at affordable tariffs to industries and will encourage industrial development in these states," the government said.

India has one of the world's fastest growing economies and demand for energy resources like coal, crude oil and natural gas are on the rise. According to research from Ernst & Young, natural gas in the country's energy mix has dropped below 10 percent because of the lack of domestic supplies. That compares with a global average mix for natural gas of around 25 percent. The natural gas market has been further diminished by the lack of pipeline distribution networks.