India has moved to cap refinery margins in a bid to cushion losses faced by fuel retailers, following its earlier decision to impose a windfall tax on fuel exports. The measure is aimed at balancing profitability across the downstream sector while ensuring stable domestic fuel supplies.
Under the new directive, refiners will be required to limit their gross refining margins (GRMs), particularly during periods of elevated global crude prices and strong export demand. The move comes as state-run oil marketing companies (OMCs) continue to face financial pressure from selling petrol and diesel at controlled prices in the domestic market.
Industry sources indicate that the government is seeking to prevent disproportionate gains by refiners at a time when retailers are absorbing losses, especially amid volatile crude markets. By capping margins, authorities aim to redistribute gains within the value chain and reduce the burden on OMCs.
The decision follows the imposition of a windfall export tax on petroleum products, which was introduced to discourage excessive exports and improve local availability. Together, these measures reflect a broader strategy to shield domestic consumers from global price shocks while maintaining energy security.
Market participants are expected to closely monitor the impact of the margin cap on refinery operations, export volumes, and overall sector profitability in the coming months.