The wagon r duo and the palio have a world of difference in them. If you are even considering the palio then forget the wagon r. The palios are so much better in all respects. But the wagon r duo has a good quality kit and its aggressive tuning means minimal power loss.
Anyways with regards to converting to LPG, there will be a power drop. Buy a good quality kit from a RTO authorised fitment centre preferably the closed loop type kit. However, ensure that the fitment centre in your town is competent enough to service the closed loop kit as it relies on electronics and cannot be repaired/serviced by a roadside mechanic.
And take the palio 1.6, because even with the power loss, there will be more power available than your other choices (palio 1.2, wagon r duo).
Drifter
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