Govt eases guidelines for entry of private entities in fuel retail in India

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved relaxation in guidelines for granting authorization to private and foreign entities in the fuel retail sector in India. This marks a major reform of the guidelines for the marketing of petrol and diesel.

What was the existing policy on fuel retail in India?

The existing policy for granting authorisation to market transportation fuels had not undergone any changes for the last 17 years since 2002.
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It has now been revised to bring it in line with the changing market dynamics and with a view to encourage investment from private players, including foreign players, in this sector, an official release said.

"The new policy will give a fillip to 'Ease of Doing Business,' with transparent policy guidelines. It will boost direct and indirect employment in the sector. Setting up of more retail outlets (ROs) will result in better competition and better services for consumers," the statement added.

Salient features and impact

1. A much lower entry barrier for private players – the entities seeking authorisation would need to have a minimum net worth of Rs.250 crore vis-à-vis the current requirement of Rs. 2000 crore prior to investment.
2. Non – Oil Companies can also invest in the retail sector. The requirement of prior investment in Oil and Gas Sector, mainly in exploration and production, refining, pipelines/terminals etc., has been done away with.
3. The entities seeking market authorisation for petrol and diesel are allowed to apply for retail and bulk authorisation separately or both
4. The companies have been given flexibility in setting up a Joint Venture or Subsidiary for market authorisation.
5. In addition to conventional fuels, the authorized entities are required to install facilities for marketing at least one new generation alternate fuel, like CNG, LNG, biofuels, electric charging, etc. at their proposed retail outlets within 3 years of operationalization of the said outlet
6. More private players, including Foreign players, are expected to invest in retail fuel marketing leading to better competition and better services for consumers
7. The new entities will bring in the latest technology for the marketing of fuels and also encourage digital payments at the ROs.
8. Entities will also encourage the employment of women and ex-servicemen at the retail outlets.
9. CCTV facilities will be set up at all retail outlets
10. The authorised entities are required to set up a minimum 5% of the total retail outlets in the notified remote areas within 5 years of the grant of authorisation. A robust monitoring mechanism has been set up to monitor this obligation.
11. An individual may be allowed to obtain a dealership of more than one marketing company in case of open dealerships of PSU OMCs but at different sites.