Govt lifts restrictions on diesel purchases with effect from 1 July

New Delhi: The government will lift a cap on diesel purchases at retail fuel pumps from 1 July, the Union petroleum ministry said, as the supply situation for crude oil and refined products eases following disruptions due to the West Asia war.

The ministry imposed a 200-litre-per-customer daily limit on 12 June after a supply squeeze triggered by the war and elevated bulk demand affected fuel availability. The restriction also barred institutional, industrial and commercial buyers from sourcing petrol and diesel at retail outlets, requiring them to draw fuel from assigned depots instead, which will also be waived off. Although the restriction was for both petrol and diesel, it was more effective in the case of diesel, as bulk petrol procurement by a consumer does not usually go up to 200 litres.

In an order issued on Monday, the government said it was "no longer necessary in the public interest" to keep the curbs in place and withdrew the June directive, effective 1 July. The ministry attributed the reversal to improved supply conditions and a return to normal distribution arrangements.

The cap had pushed a wave of industrial and commercial buyers toward retail pumps, where diesel sold near ₹95 a litre, compared with over ₹130 a litre for bulk industrial supply, a gap the ministry said fuelled diversion, hoarding and black marketing. Diesel accounts for roughly 39% of India’s total petroleum product consumption; the country sold 94.7 million tonnes of diesel in FY26 out of 243.19 million tonnes of total product sales.

Mint earlier reported that the order restricting diesel sales at retail fuel stations may pose challenges for farmers during the ongoing kharif season, especially in regions dependent on irrigation pumps and farm machinery. Further, it also affected the operations of medium, small, and micro enterprises (MSMEs) that rely on diesel, as reported by Mint.

The restrictions were implemented amid a supply squeeze caused by the war in West Asia and the closure of the Strait of Hormuz. Although the government maintained that the country's petrol, diesel, and crude stocks were adequate, with ample diversification in crude sourcing.

"During the period of disruptions arising from the West Asia crisis, the government continued to shield retail consumers from the sharp increase in international fuel prices by maintaining stable retail prices of petrol and diesel. This led to a significant price difference between retail fuel prices and those applicable to bulk consumers. Consequently, certain industrial, commercial and institutional consumers began procuring fuel through retail outlets, leading to instances of diversion, hoarding and black marketing, which affected the equitable distribution of fuel," the petroleum ministry said in a statement on Monday.

The statement added: "The temporary measures helped ensure adequate availability of petrol and diesel across the country while safeguarding the interests of retail consumers. Their withdrawal reflects the improvement in the supply situation and the restoration of normal supply arrangements."

Diesel accounts for the largest share (nearly 39%) of total petroleum product consumption in the country. In FY26, a total of 94.7 million tonnes of diesel was sold across India out of the 243.19 million tonnes of product sales.

The restrictions were implemented amid the supply squeeze due to the West Asia war and the closure of the Strait of Hormuz. Although, the government maintained that the stocks of petrol, diesel and crude in the country was adequate with ample diversification of crude sourcing.

With industrial diesel prices at over ₹130 per litre, a large number of commercial and industrial buyers shifted to retail pumps where prices are around ₹95.

"During the period of disruptions arising from the West Asia crisis, the government continued to shield retail consumers from the sharp increase in international fuel prices by maintaining stable retail prices of petrol and diesel. This led to a significant price difference between retail fuel prices and those applicable to bulk consumers. Consequently, certain industrial, commercial and institutional consumers began procuring fuel through retail outlets, leading to instances of diversion, hoarding and black marketing, which affected the equitable distribution of fuel," the petroleum ministry said in a statement on Monday.

The statement added: "The temporary measures helped ensure adequate availability of petrol and diesel across the country while safeguarding the interests of retail consumers. Their withdrawal reflects the improvement in the supply situation and the restoration of normal supply arrangements."

Diesel comprises the highest share (nearly 39%) among the total consumption of petroleum products in the country. In FY26, a total of 94.7 million tonne of diesel was sold across India out of the 243.19 million tonne of product sales.