New Delhi, June 3: In a significant decision during a cabinet meeting chaired by Prime Minister Narendra Modi, the Indian government has approved a one-time budgetary assistance of ₹10,000 crore for oil marketing companies (OMCs). This move aims to mitigate the impact of rising and volatile fuel prices due to the ongoing crisis in West Asia.
According to an official statement, this budgetary support will be provided as an interest-free advance to OMCs through the grant requests from the Ministry of Petroleum and Natural Gas. The primary goal is to shield airlines from the losses incurred due to high and unstable prices of Aviation Turbine Fuel (ATF).
The ATF price stabilization support will remain in effect for 36 months. However, it will be reviewed annually or until the complete recovery and adjustment of the advance amount, whichever comes first.
The government clarified that this assistance is intended to enable OMCs to supply ATF to airlines at relatively stable prices during this period of extraordinary fuel price volatility.
The cabinet note stated that the interest-free assistance of up to ₹10,000 crore will be provided to OMCs. If the import parity price (IPP) of ATF exceeds the predetermined benchmark in the international market, the losses incurred will be compensated from this fund.
The government has made it clear that when international ATF prices decrease, the differential amount will be recovered from OMCs and deposited back into the Consolidated Fund of India. This arrangement will continue until the full amount of assistance is recovered.
This scheme will be available to all interested scheduled Indian airlines and will apply to both domestic and international operations.
Under the new arrangement, airlines will benefit from greater stability and predictability in fuel costs, significantly reducing their exposure to sudden price hikes.
To implement this scheme, a memorandum of understanding (MoU) will be signed between the participating airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas also being signatories.
Airlines participating in this special arrangement will be required to purchase ATF exclusively from OMCs for a maximum of three years. However, this will be reviewed annually or will cease once the full assistance amount is recovered.
The government believes that this arrangement will assist airlines in better managing fuel costs, allowing them to develop their operational and financial plans more effectively.
The positive impact of this initiative is expected to extend to sectors such as tourism, hospitality, trade, exports, regional development, and investment.
According to government data, international ATF prices have surged significantly due to the ongoing crisis in West Asia. In March 2026, the price of ATF was approximately ₹60.50 per liter, which skyrocketed to ₹142 per liter by May 2026. This represents a staggering increase of nearly 2.5 times in just two months, placing immense pressure on airline costs.
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