Diesel sales by the country's state-run refiners fell 5% during the first fifteen days of November compared with the year earlier period, to 2.86 million tonnes, according to provisional data compiled by Indian Oil Corp (IOC).

India's diesel consumption, which accounts for about 40% of overall refined fuel sales in the country and is a key parameter linked to its economic growth, had risen for the first time in eight months in October.

IOC, Hindustan Petroleum Corp and Bharat Petroleum own about 90% of India's retail fuel outlets.

Lower diesel sales in the world's third largest crude importer could be bad news for oil producers and refineries as the fuel accounts for the bulk of refiners' output.

However, industry officials say diesel demand typically picks up before the festival season, which runs from mid-october until early November, and slows down during and after it.

Sales of gasoline rose marginally to 1.03 million tonnes, the industry data showed, while sales of jet fuel were down 53% and liquefied petroleum gas sales fell 2%.

Activity in India's dominant services industry also expanded for the first time in eight months in October. Indian government officials have cited higher power consumption and tax collections as indicators of demand returning to pre-COVID levels.

India's daily COVID-19 case count has steadily declined since September, although it has the second highest total number of cases in the world.

(Reporting by Nidhi Verma; Writing by Sudarshan Varadhan; Editing by Tom Hogue, Kirsten Donovan)

By Nidhi Verma