The government has told state fuel retailers to raise diesel prices by 0.40 rupees to 0.50 rupees a litre every month to gradually align them with market rates, a source privy to the development said on Friday.
The increase excludes value added tax and other taxes in various states.
The government has also told fuel retailers to sell diesel, which accounts for 40 percent of fuel consumption in the country, at free market rates to bulk consumers such as industrial clients, the source, who requested anonymity, said.
India earlier on Thursday had given fuel retailers some leeway to raise prices of diesel, which is heavily subsidised by New Delhi.
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