Tax Cuts and Festivities Drive Auto Fuel Demand Surge in September

Strong Annual and Monthly Diesel Growth

India’s diesel consumption saw a significant rise in September 2025, climbing 6.4% year-on-year (y-o-y) and 2.9% month-on-month (m-o-m), reaching approximately 6.77 million tonnes. This growth was notable as it occurred despite heavy monsoon rains during the month.
Fueling Factors: GST Rationalization and Stocking

Industry sources attribute the unexpected surge in demand primarily to two factors:
1. Festival Season Stocking: Distributors increased their inventory ahead of the October-December festival and marriage season.
2. GST Rate Cuts: The government’s rationalization of GST rates, intended to boost consumer spending, led to stockists booking higher quantities in advance to pass on the GST benefits to consumers.
Petrol Consumption Mixed

Consumption of petrol recorded a 7.5% increase y-o-y as the personal mobility segment continues to expand with more vehicle purchases. However, month-on-month usage fell by just over 4% due to the impact of monsoon rains on personal mobility.