Petroleum Retail Business in India Becoming More Competitive
The petroleum retail business in India will likely become more competitive. Reliance Industries (RIL) has been granted a new marketing authorisation to sell auto fuels in the country under relaxed norms. Chennai-based IMC, specialising in oil terminals, has also received approval to sell auto fuels in India. Any entity with a net worth of at least Rs 500 crore is eligible for obtaining the liberalised licence to sell petrol and diesel. A licence can be obtained to retail petrol and diesel to bulk or retail consumers. Last year, norms were relaxed for retailing of auto fuels, allowing non-oil companies to enter the market. This could help private and foreign firms to enter the world’s fastest-growing market.
New Regulations and Market Dynamics
The government said on Tuesday that any entity with a net worth of at least Rs 500 crore is eligible. Those seeking authorisation for both retail and bulk should have a minimum net worth of Rs 500 crore at application. India imposed a windfall tax on crude oil producers in July 2022. It extended the levy on exports of gasoline, diesel, and aviation fuel. Private refiners wanted to sell overseas to make gains from margins instead of selling locally.
Impacts on Fuel Prices and Market Entry
Diesel cars may get pricier with the usage of expensive filters in BS-VI engines. This could lead to a drop in demand. To curb emissions, India will adopt BS-VI norms in April 2020. The Modi government could reduce petrol, diesel prices. "I can sell them for 35-40 rupees," he said. Several factors like taxes, dollar exchange rate constitute price fixation by oil marketing companies. If Central and State Governments reduce their taxes by 50%, then prices could reduce by Rs 20 per liter. Rates of VAT vary across states. Hence prices differ.
Enhancing Efficiency and Market Penetration
Jio-bp will sell diesel with additives at 1 rupee cheaper than state-run companies. The additive helps clean engines and can improve efficiency. Higher sales could lower Reliance’s diesel exports. Most diesel is sold in transport. Converting diesel trucks to CNG has limitations, including lower tonnage capacity. Indian Standard Specification for Auto LPG is different from that used for other purposes. Petrol specifications also vary like MS 93, Bharat Stage IV and VI. From April 2017, India requires on-road diesel and gasoline to meet BS-IV specifications and BS‐VI in Delhi. Ethanol Blended Petrol contains 10% ethanol since December 2017.
Fuel Import Policies in India
Can diesel be imported in India?