India approves Rs 10,000 crore fuel price fund

The Indian government has approved a one-time budgetary support of Rs 10,000 crore to stabilize aviation turbine fuel (ATF) prices for domestic airlines, a measure designed to cushion the industry from soaring global fuel costs linked to the ongoing West Asia crisis. The Union Cabinet approved the creation of a Price Stabilisation Fund on Wednesday.

The mechanism will provide interest-free advances to state-owned oil marketing companies (OMCs) through the Ministry of Petroleum and Natural Gas. This support is intended to enable OMCs to offer more predictable fuel pricing to all scheduled Indian carriers for both domestic and international operations. The fund will compensate OMCs whenever the prevailing international ATF price, measured by Import Parity Price, exceeds a benchmark level determined under the scheme.

Officials described the arrangement as a recovery model, not a permanent subsidy. Once international ATF prices moderate, the differential support extended to OMCs will be recovered and returned to the government's Consolidated Fund. The scheme will remain operational for 36 months or until the entire advance is recovered, whichever comes first. A monitoring committee...