NEW DELHI — The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved one-time budgetary support of Rs 10,000 crore for oil marketing companies to help stabilize aviation turbine fuel prices for scheduled Indian airlines.
The support comes as ATF prices have risen sharply during the ongoing West Asia crisis, increasing fuel cost pressure on airlines operating domestic and international routes.
The budgetary support will be provided as interest-free advances to oil marketing companies through the Demands for Grants of the Ministry of Petroleum and Natural Gas. The measure is intended to shield the companies from losses caused by volatile and elevated ATF prices.
The ATF price stabilization support will remain in effect for 36 months, with an annual review, or until the advance amount is fully recovered or settled, whichever comes earlier.
According to an official statement, the support will help oil marketing companies provide more stable ATF pricing to airlines during the current period of exceptional fuel price volatility.
“A one-time budgetary support of up to Rs 10,000 crore shall be provided as an interest-free advance to OMCs to support ATF price stabilisation for Scheduled Indian Airlines. The corpus shall compensate OMCs for losses arising from elevated international ATF prices whenever the prevailing Import Parity Price exceeds the benchmark price determined under the approved mechanism,” according to the Cabinet note.
When international ATF prices moderate, the differential amount will be recovered from oil marketing companies and returned to the Consolidated Fund of India. The arrangement will continue until the full support amount is recovered and settled.
The scheme will be available to all willing scheduled Indian carriers for both domestic and international operations. The mechanism is designed to give airlines greater predictability in fuel costs through a fixed-price arrangement, reducing their exposure to sudden fuel price increases.
The arrangement will be implemented through a memorandum of understanding between participating Indian airlines and oil marketing companies. The Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas will also be signatories, according to the statement.
Under the one-time arrangement, participating airlines will procure ATF only from oil marketing companies for up to three years, subject to annual review or until the advance amount is fully recovered, whichever comes earlier.
The government said the mechanism will provide greater stability and predictability in ATF pricing for Indian airlines, supporting better operational and financial planning. It said the measure could also have positive effects on tourism, hospitality, trade, exports, regional development and investment.
International ATF prices have surged during the West Asia crisis, rising nearly 2.5 times from Rs 60.50 per liter in March 2026 to Rs 142 per liter in May 2026. (Source: IANS)
