Government Says Industrial Consumers Are Buying Cheaper Retail Fuel Intended for Small Users
Industrial consumers in India, including factories and fleet operators, are taking advantage of lower retail fuel prices at state-run petrol pumps, according to the Union petroleum ministry, which said the practice is diverting subsidized fuel away from the households and small users the policy is meant to protect. The ministry said the government is concerned that industrial buyers are purchasing petrol and diesel from retail outlets operated by public sector oil-marketing companies instead of buying bulk fuel at market-linked industrial rates. It warned that this undermines the cushion intended for ordinary consumers such as two-wheeler riders, farmers and households, who are still being shielded from the full impact of higher global crude oil prices.
The petroleum ministry said the three state-run fuel retailers—Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum—are continuing to sell fuel below market rates and are facing cumulative under-recoveries of about ₹550 crore per day on petrol, diesel and cooking gas. It also said private fuel retailers are losing business because their prices adjust more quickly to market levels. According to the ministry, private companies have seen a decline of about 38% in high-speed diesel sales in the current month, while bulk customer volumes for PSU retailers have fallen by about 29% and are shifting to retail outlets. The government said this trend causes local shortages at pumps and concentrates demand in the retail channel.
The ministry clarified that the lower retail pricing cushion is meant for consumer purchases at pumps and is not intended for industrial procurement, where pricing is supposed to reflect international market conditions. It urged industry associations to inform their members about the rules and consequences of violating them.
Fuel prices in India have also risen in recent weeks. State-run OMCs increased petrol and diesel prices four times between 15 and 26 May, with a cumulative hike of ₹7.5 per litre. In the latest revision, petrol and diesel were raised by more than ₹2 per litre. In New Delhi, petrol increased by ₹2.61 to ₹102.12 per litre, while diesel rose by ₹2.71 to ₹95.20 per litre.
Separately, Defence Minister Rajnath Singh said the country’s fuel supply remains normal and asked citizens not to rush into panic buying of petrol, diesel or LPG. Singh, who chairs the informal group of ministers on West Asia, led the sixth meeting on Wednesday to review the conflict situation and India’s preparedness. The meeting also assessed fertilizer stocks during the kharif sowing season.
The government said fertilizer availability remains comfortable despite disruptions linked to the West Asia conflict. Stocks are currently above 51% of projected seasonal demand, compared with the usual benchmark of around 33%. For Kharif 2026, the agriculture ministry has estimated fertilizer demand at 39.05 million tonnes, while availability stood at 20.04 million tonnes as of 27 May. Government data showed that domestic production and imports added nearly 12.24 million tonnes to total availability after the Gulf crisis began, helping shield Indian agriculture from external supply shocks.
