The Central Government has decided to withdraw all emergency restrictions imposed on the purchase of petrol and diesel from July 1, 2026, bringing relief to transporters, industries and commercial fuel consumers across the country. The decision comes after authorities reviewed the fuel supply situation and concluded that petroleum availability has returned to normal.

With the new order, the 200-litre daily diesel purchase limit per vehicle at retail fuel stations has been abolished, allowing vehicle owners and commercial operators to purchase fuel according to their operational requirements. Restrictions that prevented factories, industrial units and other bulk consumers from purchasing fuel at retail petrol pumps have also been withdrawn.

The Ministry of Petroleum had introduced the emergency restrictions on June 11 following concerns over fuel availability triggered by disruptions in global crude oil markets. The curbs were initially intended to remain in force for 90 days but have now been revoked less than three weeks later after improvements in supply conditions.

Fuel supply situation stabilised

According to the government, a comprehensive review of petroleum stocks and supply chains showed that the availability of crude oil and refined petroleum products has significantly improved. As a result, officials concluded that the emergency measures were no longer required in the public interest.

A fresh order issued on June 29 formally revoked the earlier restrictions, and the revised rules will come into effect nationwide from July 1.

What changes from July 1?

The most significant change is the removal of the 200-litre daily diesel purchase limit that had been applicable at retail petrol pumps. Commercial vehicle operators, transport companies and other consumers can now purchase any quantity of diesel based on their operational needs.

Additionally, industries, manufacturing units, telecom tower operators and other commercial establishments will once again be permitted to purchase petrol and diesel directly from retail fuel stations instead of relying exclusively on bulk fuel supply channels.

Over the past 18 days, large commercial consumers had been required to procure fuel only through designated bulk sale points, a measure that often resulted in higher procurement costs.

Why were the restrictions imposed?

The emergency restrictions were introduced amid concerns arising from the US-Iran conflict, which disrupted global energy markets and raised fears of crude oil supply shortages. The government had sought to prevent hoarding, black marketing and diversion of diesel while ensuring adequate fuel availability for the general public.

Under the June 11 order, commercial buyers were barred from purchasing fuel at retail pumps, while a daily purchase cap of 200 litres of diesel per customer or vehicle was imposed across retail outlets.

Retail and bulk price gap

One of the major reasons commercial buyers shifted to retail pumps before the restrictions was the substantial difference between retail and bulk diesel prices.

For instance, diesel was available at approximately ₹95.20 per litre at retail fuel stations in Delhi, whereas bulk consumers had to pay around ₹134.50 per litre, creating a price gap of nearly ₹39 per litre. This encouraged transport operators, factories and telecom companies to increasingly purchase fuel from retail outlets, resulting in unusually high demand.

The pricing difference emerged because government-owned oil companies kept retail fuel prices unchanged to shield consumers from inflation despite rising international crude prices, while bulk fuel prices continued to remain market-linked.

Improved Gulf oil supplies

The government stated that easing geopolitical tensions in West Asia has helped restore crude oil shipments from Gulf producers. Shipping through the strategically important Strait of Hormuz has also normalised, strengthening India's domestic fuel stocks and improving supply across the country.

The Ministry of Petroleum said the latest decision was issued under its Special Powers Order, 2026, revoking the emergency notification issued earlier in June.

Transport and industries to benefit

The withdrawal of restrictions is expected to provide significant relief to the transportation, logistics, infrastructure and manufacturing sectors.

Truck operators, state transport buses and commercial fleet owners will no longer face purchase limits or additional logistical challenges, while factories and industrial consumers can resume buying fuel directly from retail outlets, simplifying procurement and reducing operational hurdles.

Government Imposes Windfall Tax on Petrol Exports to Secure Domestic Supply

The Centre has introduced a special additional excise duty of ₹3 per litre on petrol exports while slashing levies on diesel and aviation turbine fuel (ATF) exports, aiming to prioritise domestic availability amid soaring global crude prices.

The changes, notified by the Finance Ministry late Friday and effective from Saturday, May 16, come days after oil marketing companies hiked petrol and diesel prices by up to ₹3 per litre at pumps across the country. CNG prices also rose by ₹2 per kg in several cities.

Rising Global Pressures

Crude oil prices have hovered above $100 per barrel for weeks, driven by escalating tensions and conflict involving the US, Israel, and Iran. Disruptions along the critical Strait of Hormuz — through which about one-fifth of global oil supplies pass — have tightened international markets.

Indian refiners, facing higher import costs, found exporting refined products more lucrative than selling domestically in some cases. Officials moved to correct this imbalance.

Officials said the move seeks to discourage excessive petrol outflows while offering calibrated relief to refiners on other products.

Details of the Tax Adjustments

For petrol, the government has imposed a windfall tax (Special Additional Excise Duty) of ₹3 per litre on exports for the first time since the West Asia crisis intensified. Previously, it stood at nil.

Diesel export duty has been reduced from ₹23 to ₹16.5 per litre, providing refiners relief of ₹6.5 per litre. ATF duty has been cut more sharply from ₹33 to ₹16 per litre, offering a benefit of ₹17 per litre. Road and infrastructure cess on exports of petrol and diesel remains nil.

These fortnightly revisions are standard practice for special additional excise duties on fuel exports.

Why the Differential Approach?

Industry sources noted that private refiners were increasingly routing petrol cargoes abroad for better realisations as international prices climbed. The new levy aims to nudge them towards meeting local demand first. 

By easing duties on diesel and ATF, the government is balancing the books for companies that process large volumes of expensive crude. Diesel is a major transport fuel, while ATF supports the aviation sector, both critical for economic activity.

A senior government official, speaking on condition of anonymity, said the primary goal remains ensuring no shortages at retail outlets. “Domestic supply security is paramount when global conditions are volatile.”

Recent Domestic Price Hike Context

The export duty tweak follows Friday morning’s upward revision in retail fuel prices. Oil companies cited the elevated cost of crude purchases as the reason. This marked another round of increases amid the ongoing global squeeze. 

Pump prices in cities like Delhi, Mumbai, Bhopal, and Chennai reflected the change, adding to household and transport costs. However, the Finance Ministry clarified that the new export measures will not directly affect domestic retail prices or excise duties on locally sold fuels.

Impact on Oil Companies and Consumers

For refiners, the higher cost of exporting petrol is expected to encourage greater allocation to the domestic market. Reduced duties on diesel and ATF should help offset some margin pressure. 

Analysts believe the calibrated policy will help maintain a steady supply chain without triggering fresh domestic price shocks in the immediate term. Public reactions in major cities have been mixed, with many commuters expressing concern over repeated fuel hikes but welcoming efforts to stabilise availability.

Background on Windfall Taxation:Such levies capture extraordinary profits arising from geopolitical events rather than operational efficiency. Proceeds typically support public welfare or buffer fiscal pressures. India has used this tool periodically during previous oil shocks. 

Outlook and Next Steps

The situation in West Asia remains fluid, with potential for further volatility in crude benchmarks. The government is expected to continue fortnightly reviews of export duties based on global prices and domestic stock levels.

Petroleum Ministry officials are monitoring refinery throughput and inventory positions closely. Any further escalation in the Hormuz region could prompt additional measures to safeguard Indian consumers. 

For now, the twin approach of taxing petrol exports while easing burdens on diesel and ATF signals a pragmatic response to a challenging external environment. Motorists and industry players will watch the next few weeks for signs of stability in both supply and pricing.