Government lifts the 200-litre retail fuel purchase cap from 1 July.
Fuel supply normalises after Strait of Hormuz disruption eased nationwide.
Diesel, which accounts for 39% of fuel use, faced the biggest impact.
The Union petroleum ministry will lift a 200-litre daily limit on retail fuel purchases starting 1 July, rolling back restrictions imposed during recent global supply disruptions.
The government issued an order on Monday, saying it was "no longer necessary in the public interest" to keep the curbs in place, waiving the rules that barred institutional, industrial and commercial buyers from purchasing petrol and diesel at retail outlets.
Bulk consumers will no longer be forced to source fuel exclusively from assigned depots. Although the restriction applied to both fuels, it was more effective for diesel, as bulk petrol procurement rarely exceeds 200 litres.
The ministry originally imposed the cap on June 12 following a supply squeeze triggered by the West Asia war and the closure of the Strait of Hormuz. "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," the ministry said.
Price Gap Fuelled Diversion
The restrictions addressed a market disparity. Retail diesel prices stayed stable near ₹95 a litre, while bulk industrial rates soared beyond ₹130 a litre, according to Mint.
This ₹35 price gap drove industrial and commercial buyers toward retail pumps. The sudden shift caused localised supply strains and prompted black market activity, the report said.
"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 ministry said.
Impact on Key Sectors
Diesel dominates Indian energy usage. The fuel accounts for nearly 39% of the country's total petroleum consumption. Distributors sold 94.7 million tonnes of diesel in the 2026 financial year out of 243.19 million tonnes in overall product sales, the Mint report said.
The 12 June limits created operational hurdles across the economy. Farmers struggled to run irrigation pumps and agricultural machinery during the ongoing kharif season. Micro, small and medium enterprises also faced disruptions to their diesel-reliant operations, Livemint reported.
Throughout the regional crisis, officials insisted that domestic supplies remained secure. The government maintained that national reserves of petrol, diesel and crude oil were adequate, supported by a diversified sourcing strategy.
