Government intensifies action against diversion of subsidised diesel meant for consumers to industrial users amid rising fuel sales

The government said on Wednesday that it is tracking the pattern where industrial users are buying cheaper fuel from retail outlets of PSU oil marketing companies (OMCs), which is earmarked for retail consumers such as common man and farmers.

To deal with the concerning situation, the Oil Ministry, OMCs and State governments have intensified field enforcement measures, and are engaging with industry associations to remind members of the conduct expected.

The development comes as reports emerged from Maharashtra on Tuesday indicating an unusual surge in fuel sales, with diesel sales skyrocketing by around 42 per cent and petrol by 21 per cent over the daily average across many districts.

The Informal GoM, headed by Defence Minister Rajnath Singh, on Wednesday took stock of the petrol, diesel, LPG and natural gas supply situation in the country and deliberated on the pattern of bulk diesel users unethically buying fuel earmarked for retail consumers.

Retail consumption

During the IGoM meeting, it was noted that PSU OMCs refrained from passing the full international price into retail, absorbing around ₹550 crore per day as losses on sale of petrol, diesel and LPG. This cushion is intended for retail consumption alone; industrial and commercial diesel tracks international prices as a matter of standing policy.

Separately, in a statement the Oil Ministry assured that there is no scarcity of any petroleum product. There is, in pockets, a pattern of arbitrage that is creating the appearance of one.

Under the direction of the government, and as a deliberate act of consumer protection during the ongoing West Asia disruption, the OMCs have refrained from passing through the full international price into domestic retail sales. This cushion is intended for retail consumers: households, two-wheeler commuters, and farmers at the pump. It is not extended to industrial procurement, where pricing tracks international actuals as a matter of standing policy, it added.

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 Ministry noted.

Higher rates

“It has been observed that private OMCs are experiencing a decline of approximately 38 per cent in diesel offtake during the current month, across both retail outlets and bulk customers due to higher rates fixed by them. This volume is shifting entirely to PSU oil marketing retail outlets. Coupled with this, PSU bulk customer volumes have also recorded a decline of approximately 29 per cent, which is also migrating to retail outlets,” it pointed out.

The government, taking a “serious view”, has asked industry associations to make their members aware of both the principle and the consequence of violations.

The government has also 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 EC Act and Control orders issued thereunder, the Oil Ministry said.

Published on May 27, 2026