In a major change of the well established 10 year old policy, the Commerce Minister reversed the free import of kerosene on 25 November. Imports are now canalized through Indian Oil and the three other public sector oil companies, namely, Bharat Petroleum, Hindustan Petroleum and IBP. The canalization applies even to imports against a licence for export production, licence based imports too must be through a nominated state trading enterprises (STE). Even though the canalising agencies are bound to honour all requests for import from private parties under the WTO provisions incorporated in the exim policy, in actual practice, the import window is more or less closed since the refineries set up by four agencies are themselves producers of kerosene.
The public sector refineries along with the giant Reliance Petroleum Refinery at Jamnagar are behind the return of the restrictionist policy. They are not happy with sharing the booming Indian market with low cost foreign producers. Imports of petroleum products (other than LPG) in customs heading 27.10, largely comprising of kerosene, are up by eight percent to touch Rs 7247 crores in 2002-2003 compared to Rs 6700 crores in the previous year. While India has sufficient quantity of the light distillate of petrol and diesel, supplies of the middle distillate kerosene are not adequate to meet the rising demand from rural and hill areas in the lighting and heating segments.