The Indian government has introduced a temporary restriction on diesel purchases at retail outlets, capping sales at 200 litres per customer per day. This measure, effective for up to 90 days, also prohibits industrial, institutional, and commercial bulk consumers from buying diesel from public retail pumps.
Why the Diesel Sales Cap?
According to the Ministry of Petroleum and Natural Gas, the restrictions were necessitated by an "extraordinary shift in demand." Industrial and commercial users have increasingly shifted their diesel purchases to retail outlets because retail diesel is approximately ₹40 per litre cheaper than bulk supplies. This price disparity has led to instances of black marketing and hoarding, with large quantities of diesel being bought in jerry cans for resale.
The situation intensified after private oil marketing companies raised prices, leading to a significant drop (around 58% in May 2026) in their high-speed diesel (HSD) sales. Consequently, demand surged at public sector undertaking (PSU) operated outlets, with 327 districts reporting over 10% growth in diesel sales compared to the previous year, and 80 districts seeing growth exceeding 30%.
New Rules and Enforcement
Under the "Motor Spirit and High-Speed Diesel (Temporary Regulation of Supply through Retail Outlets) Order, 2026," retail outlets operated by public sector oil marketing companies (OMCs) can only dispense diesel into vehicle tanks or Petroleum and Explosives Safety Organisation (PESO)-approved containers, with the 200-litre daily limit.
Bulk consumers are now mandated to source their diesel supplies through designated consumer pumps. The government has clarified that the 200-litre cap is far beyond the typical needs of private vehicles and is intended to protect retail consumers from intermittent supply disruptions, not to affect ordinary vehicle owners.
Oil marketing companies and retail outlet dealers are responsible for ensuring compliance. State governments and Union Territory administrations have also been directed to take stringent action against black marketing and unauthorized diversion of fuel. Violations of the order will attract penalties and legal action under the Essential Commodities Act, 1955, and other applicable laws.
No Shortage and PSU Losses
The government emphasized that this order is a temporary measure and should not be misinterpreted as fuel rationing, reiterating that there is no shortage of petrol or diesel in the country. India remains a major refiner and exporter of petroleum products, committed to ensuring uninterrupted fuel supplies.
Public sector OMCs—Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation—are reportedly absorbing daily losses of nearly ₹500 crore on the sale of petrol, diesel, and domestic LPG. This financial support aims to shield households, farmers, and other end-users from the impact of global crises, rather than subsidizing industrial or bulk consumption.