Supply chain integrity: Enforcement against black marketing

The true strength of an energy supply chain is not measured only by how much fuel it imports or how efficiently it refines crude. It is measured by something far less visible: whether every litre of petrol, every drop of diesel and every LPG cylinder reaches the citizen it is meant for. In a country as large and diverse as India, with over 90,000 fuel retail outlets, thousands of LPG distributorships and more than 33 crore domestic LPG consumers, maintaining this integrity is not merely a logistics challenge-it is a governance challenge.

Every supply chain creates opportunities for leakages. Diversion of diesel to industrial users, hoarding during periods of uncertainty, illegal decanting of LPG cylinders, duplicate domestic connections, adulteration of transport fuels and unauthorised resale have historically threatened both consumer confidence and public resources. Left unchecked, these practices distort markets, create artificial shortages and undermine the very purpose of equitable energy access.

What distinguishes India’s approach today is that enforcement is no longer dependent only on physical inspections. It has evolved into a technology-enabled ecosystem where digital visibility, predictive surveillance and strict regulatory action work together to ensure that the supply chain remains transparent from refinery gate to retail outlet and from LPG bottling plant to household kitchen.

The recent global energy disruption once again demonstrated why such systems matter. Whenever uncertainty enters the market, black marketing follows close behind. Anticipating this risk, the Government moved quickly to strengthen surveillance across the country. States established dedicated control rooms to monitor petroleum supplies, while Oil Marketing Companies intensified inspections across retail outlets and LPG distributorships. Thousands of enforcement raids were carried out against illegal storage and diversion, leading to large-scale seizure of illegally stocked LPG cylinders and prosecution of offenders. At the same time, OMC field teams conducted thousands of surprise inspections every day, ensuring that distribution remained uninterrupted while preventing panic-driven hoarding.

The response was equally proactive in the retail fuel sector. In June 2026, the Government introduced new regulations governing the sale of petrol and diesel through retail outlets. The objective was simple but significant: eliminate opportunities for diversion before they occur. Diesel sales were restricted primarily to vehicle fuel tanks and approved containers, daily quantity limits were prescribed, and resale of retail fuel was prohibited. Bulk industrial consumers were required to procure fuel through designated bulk supply channels rather than purchasing subsidised retail fuel. These measures addressed a growing arbitrage where lower retail diesel prices had encouraged illegal diversion into commercial markets.

Yet regulation alone cannot protect a supply chain of this scale. The real transformation has been digital.

Today’s fuel distribution network generates continuous streams of operational data. Tank trucks transporting petroleum products are GPS tracked from dispatch to delivery. Tamper-proof electronic locking systems help detect unauthorised access during transit. Automated tank gauging systems continuously reconcile inventory at retail outlets, while digitally integrated dispensing units maintain transaction records that significantly reduce the possibility of manual manipulation. Every delivery creates a digital audit trail, allowing abnormal patterns to be identified much earlier than traditional inspection-based systems ever could.

LPG distribution has undergone an equally significant transformation.

The entire consumer lifecycle-from new connection to refill booking, subsidy transfer, portability and Know Your Customer verification-has progressively shifted onto digital platforms. Every refill leaves behind a digital record, allowing distributors and Oil Marketing Companies to analyse unusual booking behaviour, identify duplicate usage patterns and detect abnormal consumption trends that may indicate diversion.

Even structural reforms have been designed with supply integrity in mind. Consumers connected to piped natural gas networks are now required to surrender domestic LPG connections, preventing duplicate entitlements and ensuring that subsidised household LPG reaches only genuine beneficiaries. Similarly, rationalisation of refill booking intervals during periods of supply stress helped discourage panic booking while maintaining equitable distribution across urban and rural consumers alike. Technology, however, is only as effective as the enforcement framework that supports it.

India’s petroleum supply chain today operates within a multi-layered regulatory structure involving Oil Marketing Companies, State Civil Supplies Departments, Legal Metrology authorities, the Petroleum and Explosives Safety Organisation (PESO), district administrations and law enforcement agencies. Retail outlets undergo routine and surprise inspections where fuel quality, quantity, dispensing accuracy and inventory reconciliation are verified. Mobile testing laboratories conduct random sampling of petrol and diesel to detect adulteration, while calibrated dispensing equipment and statutory verification by Legal Metrology authorities protect consumers against short delivery.

Importantly, enforcement has become increasingly intelligence-led rather than complaint-driven. Digital transaction records, inventory movement, transport tracking and consumption analytics now enable authorities to identify anomalies before they escalate into large-scale diversion. Instead of reacting to black marketing after shortages emerge, surveillance systems increasingly seek to prevent those shortages from materialising in the first place.

Consumers themselves have also become part of the integrity framework. Unified grievance platforms, online complaint mechanisms and digital service portals have improved transparency by allowing consumers to report irregularities directly. This additional layer of public oversight strengthens accountability across the distribution network and reinforces trust in the system.

Perhaps the most significant achievement is that supply chain integrity has become invisible to the ordinary citizen-and that is precisely how it should be.

When consumers visit a fuel station, they expect accurate quantity, genuine quality and uninterrupted availability. When an LPG refill is booked, they expect timely delivery without questioning whether the cylinder has been diverted elsewhere. These expectations are fulfilled not by chance but through thousands of daily operational decisions, digital checkpoints and enforcement actions taking place quietly across the country.

Supply chain resilience is often discussed in terms of ports, pipelines, refineries and inventories. Those remain essential. But resilience also depends on ensuring that products do not disappear after entering the distribution network. A resilient supply chain is one where every legitimate consumer receives uninterrupted service, every transaction can be traced, every anomaly can be investigated and every violation carries meaningful consequences.

India’s energy sector is increasingly demonstrating that supply chain integrity is not built solely through larger infrastructure, but through smarter governance. Technology provides visibility. Digital transformation creates traceability. Enforcement establishes credibility. Together, they ensure that fuel reaches citizens-not black markets.

That may ultimately be the most important measure of an energy system. Not simply that it can produce, import or distribute at scale, but that it can do so fairly, transparently and with the confidence that every litre and every cylinder reaches exactly where it is intended to go.

Rajkumar Dubey is the ex-Director (HR) of Bharat Petroleum Corporation Limited and ex-Chairman of Indraprastha Gas Limited; Views presented are personal.