As politics shapes policy, India's private fuel retailers run on fumes

A quasi-administered price regime and the imposition of Universal Service Obligations are complicating their business plans

Most businesses go through cycles that are the result of market forces. But the fuel retailing business in India has endured cyclical changes that have more to do with variable politics-driven policy over the past two decades than the balance of supply and demand. These policies introduced market-linked fuel pricing twice and reverted to an administered mechanism twice. Four consequential and unpredictable changes in two decades have impacted the private sector the most, presenting a showcase of how unpredictable decision-making in New Delhi can affect investment.

As a result, private fuel retail outlets have had a rollercoaster ride since they