The Indian government is taking strict action against industrial users who are diverting cheaper retail fuel, causing substantial losses for state-run oil marketing companies and potentially leading to local shortages, while also ensuring adequate fertiliser stocks for the upcoming Kharif season.
Key Points
- The Indian government is cracking down on industrial users diverting cheaper retail fuel, causing significant losses for state-run OMCs and potential local shortages.
- State-run OMCs are absorbing approximately ₹550 crore in daily losses to maintain stable retail fuel prices, a cushion intended solely for retail consumers.
- Industrial consumers diverting purchases are exploiting this cushion, concentrating demand at retail pumps, and negatively impacting OMCs' financial health.
- State governments and OMCs are intensifying enforcement, urging industry associations to educate members on the consequences of violations under the Essential Commodities Act.
- The government has also reviewed fertiliser stocks, assuring adequate availability for the Kharif 2026 sowing season despite global supply disruptions.
After the Informal Group of Ministers (IGoM) on West Asia, led by Defence Minister Rajnath Singh, on Wednesday red-flagged an emerging pattern of industrial users procuring their fuel needs from retail outlets, the oil ministry warned of strict action against firms trying to cash in on the difference between industrial and consumer prices.
As of May 27, the retail price for petrol in Delhi was Rs 102.12 a litre and diesel was Rs 95.20 a litre. Bulk diesel, meant for industrial use, is priced at Rs 149 per litre in the national capital.
Bulk customer volumes at state-run OMCs have declined by around 29 per cent in May signaling a greater reliance on retail fuel outlets.
Government's Stance on Fuel Diversion
The ministerial panel, which also acknowledged instances of black marketing by certain petroleum dealers, stressed that public-sector oil-marketing companies (OMCs) have refrained from passing the escalated international oil price to retail users, absorbing approximately Rs 550 crore of losses per day.
"This cushion is intended for retail consumption alone, and industrial and commercial diesel tracks international prices as a matter of standing policy," the statement noted.
"Industrial consumers who divert their purchases from the industrial channel to the retail pump capture this cushion at the cost of the ordinary citizen.
"They also concentrate demand at the pump in a way that produces local shortages where none would otherwise exist," the government emphasised, adding that such diversion is also adversely impacting the financial health of state-run OMCs.
Enforcement and Industry Sensitisation
The Petroleum and Natural Gas Ministry, state governments and OMCs have intensified field enforcement, and industry associations are being urged to sensitise their members about the consequences of violations.
"The Government has requested States/UTs to form special squads and take strict action against malpractice of bulk consumers and hoarders taking supplies meant for retail consumers, black marketing, unauthorised stocking and diversion of petroleum products under relevant provisions of Essential Commodities Act and Control orders issued thereunder," the statement added.
Meanwhile, private OMCs have recorded an approximately 38 per cent decline in the offtake of high speed diesel (HSD) during May, across both retail outlets and bulk customers due to higher rates fixed by such retailers.
The government said such volumes are shifting to state-run oil marketing retail outlets.
The government assured of adequate supplies of petrol and diesel to meet demand of domestic, retail and industrial customers.
The supply situation in the country today is normal and citizens should avoid panic purchases of petrol, diesel, and liquefied petroleum gas (LPG), Singh said in a post on X.
Even as India continues to diversify its energy sources, the defence minister directed officials to make continuous efforts to enhance the nation's preparedness in light of the evolving situation in West Asia.
Review of Fertiliser Stocks
Singh stressed that fertilisers and other essential agricultural inputs should remain adequately available to farmers to ensure that food prices in the country continue to remain stable.
The IGoM was informed that fertiliser stocks remain comfortable ahead of the Kharif 2026 sowing season, with the government asserting that availability across key nutrients is well above the usual levels despite recent global supply disruptions.
According to the agriculture department, fertiliser requirement for kharif 2026 has been assessed at 39.05 million tonnes against which total stocks in hand stood at around 20.04 million tonnes, which is 51 per cent more than the seasonal requirement.
Officials said this is significantly higher than the normal stocking level of around 33 per cent for this period. Data shared by the Department of Fertilisers (DoF) showed that since the recent global supply crisis, domestic production and imports together have added around 12.24 million tonnes of fertilisers to the country's availability pool.
The government said that 10 meetings of the Empowered Group of Secretaries (EGoS) have been held so far to review supply challenges and ensure uninterrupted fertiliser availability across the country. Union ministers JP Nadda, Manohar Lal, Hardeep Singh Puri, Prahlad Joshi, Ashwini Vaishnaw, Kiren Rijiju and Sarbananda Sonowal also attended the IGoM meeting.
