New Delhi, June 3 (IANS). An important decision was taken on Wednesday in the Union Cabinet meeting chaired by Prime Minister Narendra Modi. The Cabinet has approved a one-time budgetary support of Rs 10,000 crore to oil marketing companies (OMCs) to cushion the impact of rising and volatile fuel prices due to the West Asia crisis.
According to an official statement, this budgetary support from the government will be given in the form of interest-free advances to oil marketing companies through the Demands for Grants of the Ministry of Petroleum and Natural Gas.
Its objective is to protect OMCs from losses caused to airlines due to high and volatile prices of Aviation Turbine Fuel (ATF).
ATF Price Stabilization Support will be applicable for 36 months. However, this will be reviewed every year or till the entire advance amount is recovered and adjusted, whichever is earlier.
According to the government statement, this assistance is being provided to OMCs to enable them to provide ATF to airlines at relatively stable prices during the current extraordinary fuel price volatility.
The cabinet note said that this interest-free assistance of up to Rs 10,000 crore will be given to OMCs. If the import parity price (IPP) of ATF in the international market goes above the fixed benchmark, the loss caused will be compensated from this fund.
The government has clarified that when international ATF prices come down, the difference amount will be recovered from the OMCs and deposited back into the Consolidated Fund of India.
This arrangement will continue until the entire assistance amount is recovered.
The scheme will be available to all interested scheduled Indian airlines and will be applicable on both domestic and international operations.
Under the new arrangement, airlines will get greater stability and predictability in fuel costs, which will help them avoid the risk of sudden increase in fuel prices to a great extent.
To implement the scheme, a Memorandum of Understanding (MoU) will be signed between the participating airlines and oil marketing companies.
The Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas will also be signatories to this agreement.
Under this special arrangement, participating airlines will have to purchase ATF only from OMCs for a maximum of three years. However, this will be reviewed every year or the scheme will end when the entire assistance amount is recovered.
The government believes that this arrangement will help airlines manage fuel costs better and prepare their operational and financial plans more effectively.
It will also have a positive impact on sectors like tourism, hotel industry, trade, exports, regional development and investment.
According to government data, the ongoing crisis in West Asia has led to a sharp increase in international ATF prices.
The price of ATF was around Rs 60.50 per liter in March 2026, which increased to Rs 142 per liter by May 2026. This means that in just two months the prices have increased by almost 2.5 times, which has put huge pressure on the costs of the airlines.
–IANS
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