Government Asserts Adequate Availability of Petrol and Diesel, Seeks Stringent Measures Against Diversion

Government Assures Sufficient Petrol and Diesel Supplies Amid Volatility

The Indian government has asserted that the country has "more than adequate" supplies of petrol and diesel to meet all domestic demand, despite warning against the diversion of subsidised retail fuel into industrial use. According to the oil ministry, India's refining capacity of 258.1 million tonnes per annum across 22 refineries is sufficient to meet domestic consumption of 243.2 million tonnes in FY26, while also exporting 61.5 million tonnes of petroleum products.

The government has been in continuous coordination with public sector oil marketing companies (OMCs), state governments, and industry bodies to ensure uninterrupted supply. A review of the situation with chief secretaries of states and Union Territories, as well as industry bodies FICCI and CII, found "no scarcity of petroleum products" on the ground. However, any apparent tightness in pockets stems from "arbitrage", not supply constraints.

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The government is absorbing losses of about Rs 550 crore per day on petrol, diesel, and domestic LPG to shield retail consumers from full international price pass-through amid volatility linked to West Asia tensions. This subsidy buffer is intended for households, commuters, and farmers using retail pumps. However, it warned that industrial buyers diverting purchases from bulk channels to retail outlets are capturing this pricing cushion, distorting local availability and creating artificial pressure at fuel stations.

The ministry also noted a shift in market share, with private fuel retailers seeing a roughly 38 per cent decline in high-speed diesel sales this month, while bulk industrial offtake through PSU OMCs has fallen about 29 per cent. Volumes that are reportedly moving to retail outlets. The government has asked industry associations to sensitise members against such practices and urged states and Union Territories to deploy special enforcement squads to curb hoarding, black marketing, unauthorised storage, and diversion of petroleum products under relevant legal provisions.

Reaffirming supply stability, the government said India's refining capacity, coordinated operations of public sector fuel retailers, and Centre-state cooperation form a "working architecture of energy security". It urged citizens to rely on official communications and avoid rumours that confuse "arbitrage-driven distortions" with actual fuel shortages. 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 the Essential Commodities Act and Control orders issued thereunder.

The government remains fully seized of the international situation. India's refining strength, the disciplined operation of the Public Sector OMCs, and the active coordination across Centre, states, and industry constitute the working architecture of energy security during this period. Petrol and diesel prices have risen about Rs 7.5 per litre and CNG by Rs 6 a litre as a part of the increased cost of energy caused by the Iran war is passed on to consumers.

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