The government has flagged a growing concern over industrial users, such as factories and large fleet operators, exploiting subsidised retail fuel prices that are meant to protect ordinary households, two-wheeler owners, and farmers.

According to the Union Ministry of Petroleum and Natural Gas, these industrial buyers are increasingly purchasing cheaper petrol and diesel from public sector oil marketing company outlets instead of opting for higher-priced bulk supplies. This practice is weakening the government’s strategy to shield small consumers from the sharp rise in global crude oil costs.

Govt’s advice for industry associations

The government has asked industry associations to sensitise their members that retail fuel prices are meant to protect ordinary consumers, not industrial buyers and that diverting purchases from bulk or industrial channels to retail pumps violates the intended pricing structure. By making members aware of the “principle”- that the retail cushion exists to shield households, commuters and farmers from global price spikes- and the “consequence”- including local shortages, unfair demand concentration at pumps and possible enforcement action- the government is trying to stop misuse of subsidised retail fuel and preserve supply stability for genuine users.

The government said supplies of petrol, diesel, Liquefied Petroleum Gas (LPG) and fertilisers across India remain normal despite disruptions from the West Asia crisis and warned that some industrial consumers are exploiting subsidised retail fuel intended for households. The assurance came after the sixth meeting of the Informal Group of Ministers (IGoM) on West Asia, chaired by Defence Minister Rajnath Singh, which reviewed India’s preparedness, supply-chain resilience and availability of essential commodities.

IGoM reviews supply situation and urges calm

Defence Minister Rajnath Singh, who heads the IGoM, posted on X after the meeting that “the supply situation in the country today is normal” and urged citizens to “avoid panic purchases of petrol, diesel and LPG as the Government is leaving no stone unturned to ensure the availability of all essential items.” The meeting brought together senior ministers from portfolios including petroleum, fertilisers, power, consumer affairs, railways, ports, labour, science and information technology.

Installed refining capacity exceeds domestic demand

The petroleum ministry informed the group that India’s installed refining capacity stands at 258.1 million tonnes per annum (MTPA) against domestic consumption of 243.2 MTPA in the last financial year. The country also exports around 61.5 million tonnes of petroleum products annually, the ministry noted, adding that “there is no supply gap” at the national level.

Public sector oil-marketing companies (OMCs)- Indian Oil Corporation Ltd (IOCL), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL)- continue to supply petrol and diesel across the country, the statement added.

OMCs absorbing losses to protect consumers

The government said OMCs have not passed on the full rise in international fuel prices to retail consumers and are currently absorbing cumulative losses of about Rs 550 crore per day to shield households, two-wheeler commuters and farmers from the full impact of elevated crude prices. State-run OMCs raised petrol and diesel prices four times between May 15–26 by a total of Rs 7.5 per litre; in the latest increase, rates went up by just over Rs 2 per litre. In the national capital, petrol rose by Rs 2.61 to Rs 102.12 per litre, and diesel by Rs 2.71 to Rs 95.20 per litre.

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Concern over industrial diversion to retail pumps

Despite these protective measures, the ministry flagged growing concern that some industrial consumers, including factories and fleet operators, are diverting purchases to retail pumps run by PSU OMCs to capture the lower, consumer-oriented prices.

“Industrial consumers who divert their purchases from the industrial channel to the retail pump capture this cushion at the cost of the ordinary citizen,” the ministry said, adding that such behaviour concentrates demand at pumps and can lead to local shortages.

The ministry pointed to a clear shift in demand patterns- private fuel retailers, where prices are higher and adjust faster to market rates, have seen a roughly 38 per cent decline in high-speed diesel (HSD) offtake this month across retail outlets and bulk customers. That volume is shifting largely to PSU retail outlets. PSU bulk customer volumes have also fallen by about 29 per cent, with the shortfall migrating to retail pumps.

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Enforcement and industry outreach

To address violations and alleged black marketing by certain dealers, the ministry said it has intensified enforcement actions in coordination with OMCs and state governments. It has also reached out to industry associations, asking them to make members aware that the retail cushion is meant for households and small users and that diversion to industrial procurement contravenes policy and harms ordinary consumers.

Fertiliser stocks comfortable ahead of Kharif

The IGoM also reviewed fertiliser availability ahead of the Kharif sowing season and was told that current stocks are adequate. The Department of Agriculture and Farmers’ Welfare has estimated fertiliser requirement for Kharif 2026 at 390.54 lakh metric tonnes (LMT). As of May 27, availability stood at around 200.47 LMT, or more than 51% of the requirement- well above the usual benchmark of roughly 33%.

The government said about 122.4 LMT of fertilisers were added to availability through imports and domestic production after the West Asia crisis emerged. Specifically, India has secured roughly 15 LMT of DAP (including TSP) and 10 LMT of NPKs (including ammonium sulphate), expected to arrive at Indian ports during May and June. Urea availability included 5.95 mt from domestic production and 1.36 mt through imports; DAP figures included 8,26,000 tonnes domestically and 88,000 tonnes via imports; NPKs were 1.93 mt domestic and 5,65,000 tonnes imported.

Subsidy flows to fertiliser companies ensured

Rajnath Singh directed officials to continue strengthening preparedness and 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 release added that fertiliser input supplies are being reviewed regularly and subsidy dues to fertiliser companies are being cleared on a weekly basis to ensure uninterrupted availability.

Highlighting both the fuel and fertiliser assessments, the government appealed to citizens not to indulge in panic purchases of petrol, diesel or LPG. The IGoM emphasised that it is monitoring the evolving geopolitical situation and supply chains closely and that multiple ministries and agencies are coordinating steps to maintain resilience against external shocks.

Officials added that they will continue to monitor international developments, shipping schedules, port arrivals and domestic distribution networks and will take targeted enforcement action where diversion or black marketing is detected. The petroleum ministry reiterated that the preferential retail pricing cushion is intended exclusively for retail consumers and warned that misuse by industrial buyers undermines policy objectives and could prompt stricter controls and compliance checks.