Believe it or not, there's a little bit of America in your fuel, even though we hardly import any oil from there. On Friday, India moved to a system of revising motor fuel prices daily in tune with global rates, something that the US has been doing for years.

But the American connection doesn't end there.

The new system kicked in with a reduction in petrol and diesel prices. This happened because crude prices have softened over the past two weeks on rising US shale production, which has undercut Opec's move to reduce output and kept oil prices in check — making it easier for the government to throw open the market for full competition.

State-run fuel retailers, which dominate 90% of the Indian market, introduced the new system with a reduction of Rs 1.12 a litre in the price of petrol and Rs 1.24 litre in diesel, both excluding state levies.

Going by the trend in international oil market, pump prices could slide further in the coming days, if the rupee maintains its current value against the dollar.

 


"Proud to share that India is first country to switch to dynamic fuel pricing on such a scale in one go," oil minister Dharmendra Pradhan tweeted to mark the beginning of a new phase in India's fuel retail market.

 


This is good news for consumers in India. The daily price revision makes deregulation real. Indian consumers can now certainly look forward to discount war at home, once again, much like in the US.

For example, even during the fortnightly revision of prices, Reliance, in spite of a limited number of operational pumps, had garnered 5-6% of market share by offering discounts.

On Thursday, company chairman Mukesh Ambani and Bob Dudley, head of British major BP, said they would jointly invest in retail business. All this will add up to better products and services for the Indian fuel consumer in the coming days.
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