It asked the government to limit the increase in domestic prices of oil products and said there should be a uniform sales tax for petroleum products.

The lawmakers panel only makes recommendations but it is up to the government to accept the proposals but generally these suggestions are taken into account while announcing any policy decisions.

India's oil minister said on Monday he was concerned refiners were making losses selling fuels at low state-administered prices, but the government would weigh political considerations before allowing higher prices.

State-run refiners Indian Oil Corp. Ltd. and Bharat Petroleum Corp. Ltd. posted their first ever quarterly losses on Friday, struggling due to government caps on product prices while crude prices have soared.

June's increase in administered petrol and diesel prices only partly compensated refiners for a 20 percent rise in crude costs since November, when fuel prices were last increased.

The government fears higher prices will stoke inflation and antagonise voters ahead of crucial assembly elections in states ruled by key allies of the federal coalition.

The panel of lawmakers on petroleum said cutting customs duty on petrol and diesel would bring it on a par with the customs duty on crude.

It also said refinery margins could be brought down to what it termed "realistic levels" as they contained a range of notional costs.

"But despite having reduced refining costs in the country, the final prices of products are being arrived at taking into account a whole lot of notional costs which boost refinery margins."

"The committee, therefore, has recommended that a realistic ceiling should be worked for the refinery margins."