The government should adopt a market-based pricing system for petroleum products to enable private firms compete well in the fuel retailing space, industry body FICCI today said.
The chamber also said the government's decision to cut prices of petroleum products will ease costs pressure on a range of consumer products including bulk items such as food grains, fruits and vegetables, while low LPG prices will significantly help consumer households.
The authorities should switch to market-based pricing of the petroleum products backed by targeted subsidies as this would enable private players to effectively compete in the area of fuel retailing, FICCI Secretary General Amit Mitra said in a statement.
Currently, local oil prices are administered and oil marketers take a hit if global crude prices are high.
However, he said, "We should remain on guard because prices can rise again as the global situation is very volatile."
This is the best time to make a determined effort for oil conservation and to increase oil reserves for a period of at least three months in place of current 15 days (which includes moving stock on vehicles and ships), FICCI said.
"Additionally, we need to cut down our dependence on imported oil and petroleum products," it added.
The government has slashed petrol prices by Rs 5 a litre and diesel by Rs 2 per litre, second round of cuts in as many months, while the domestic LPG rate was brought down by as much as Rs 25 per cylinder.