The Petrol Pump Dealers’ Associations on Wednesday sought a meeting with the Ethics Committee of Oil Marketing Companies (OMCs). The associations are demanding a full exemption from merchant discount rate (MDR) charges on UPI payments, revision of dealer margins to 7% of the billed value, and the equalisation of VAT rates on petroleum products with Chandigarh to prevent fuel smuggling.
“Calling it a discount is a complete misnomer. There is no discount involved in this charge; it is a digital recovery levy. Addressing a joint press conference, Representatives of the Rashtriya Jan Udyog Vayapar Sangathan (RJUVS), Federation of All India Petroleum Traders (FAIPT), Petroleum Pump Dealers Association Punjab (PPDAP) and Petroleum Dealers Welfare Association Haryana (PDWAH), said the retail fuel sector was facing severe financial stress due to low margins, declining sales volumes, rising operational costs and inter-state fuel smuggling.
FAIPT national spokesperson Monty Sehgal said the proposed MDR charges on UPI transactions were a major concern for dealers operating on fixed margins. Petroleum dealers operate on strictly regulated margins and cannot absorb additional transaction costs,” he said.
The associations demanded a 100% exemption from MDR charges on UPI payments made at petroleum retail outlets. PDWAH president Sanjeev Chaudhary said dealer margins, revised in 2017 and given only a nominal increase in November 2024, remained inadequate to meet rising establishment costs. He said the marginal increase in margins in 2024 had failed to offset inflationary pressures, while low-volume dealers selling less than 100 kilolitres a month had received virtually no benefit. PPDAP president Paramjit Singh Doaba said aggressive expansion of petrol pump outlets in 2018 and 2023 had pushed the number of retail outlets in the country to more than one lakh, resulting in a sharp decline in average monthly throughput.
Though implementation of the charges has been deferred until Diwali, they said the government should withdraw the proposal altogether. “More than 80% of a dealer’s margin goes towards fixed operational expenses, including salaries, electricity bills, interest on capital investments and compliance-related costs imposed by OMCs,” he said.
