Government sources have rejected allegations that India's state-run oil marketing companies (OMCs) are earning “super-normal profits,” arguing instead that headline numbers reflect global cycle recovery, not extraordinary gains, and remain consistent with global industry benchmarks.
Pointing to global oil majors and trading houses, officials said the scale of the energy sector must be viewed in context. Commodity trader Vitol has reported annual profits of around $35 billion in recent years, while global majors such as BP, Shell, ExxonMobil and Chevron have each posted tens of billions of dollars in annual earnings during the post-2022 energy cycle. Against this backdrop, the combined profit of India's three OMCs at Rs 77,821 crore in fiscal 2026, which is roughly $9 billion and this does not indicate windfall gains, but normal cyclical earnings in a large-scale commodity business, they said.
Officials added that the reported 130% jump in profit is being misinterpreted, as it is calculated from an artificially depressed base. Fiscal year 2025 profits had fallen sharply to Rs 33,602 crore, largely due to Rs 40,434 crore in absorbed under-recoveries on domestic LPG. Once adjusted for this one-time absorption, fiscal 2026 profits are broadly aligned with fiscal 2024 levels of Rs 80,986 crore, indicating a recovery rather than a surge in profitability.
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The government also highlighted that absolute profit figures must be seen relative to scale. Indian Oil Corporation alone operates with an annual turnover close to Rs 10 lakh crore, while combined OMC turnover stands near Rs 20 lakh crore. Across cycles, operating margins remain in the range of 1–3%, which officials said is consistent with a low-margin, high-volume refining and retail fuel distribution business.
A hypothetical 0.1% margin, they noted, would make the system unviable, leaving no room for working capital, contingency buffers, or capital expenditure. With refinery expansion projects costing Rs 50,000–60,000 crore each, the sector requires a sustainable profit pool of about Rs 1 lakh crore annually to fund capacity expansion, energy transition investments and infrastructure build-out.
Officials also stressed that nearly half of OMC profits flow back to the Government of India as dividends, alongside corporate taxes, financing public infrastructure such as roads, railways and metros. Remaining earnings are reinvested into refining capacity expansion to over 310 million tonnes per annum by 2030, renewable energy diversification, pipeline networks, storage infrastructure and long-term energy security needs.
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On retail fuel pricing, sources said increases in 2026 were driven by a sharp rise in crude procurement costs, higher freight premiums, and insurance surcharges following disruptions linked to the Strait of Hormuz, which carries nearly 20% of global crude trade. Even after revisions, Indian pump prices remain lower than several neighbouring economies.
To cushion consumers, the government has maintained excise duty cuts, including Rs 10 per litre reductions on both petrol and diesel announced in March 2026, alongside earlier cuts in 2021 and 2022. Officials said cumulative excise relief now stands at Rs 23 per litre on petrol and Rs 26 per litre on diesel, in addition to LPG price caps and managed aviation turbine fuel pricing, reflecting a broader strategy of absorbing global shocks while maintaining affordability.
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