Diesel consumption, which makes up over a third of local fuel sales, increased 7.5 percent in September, the lowest rise since December, to 4.94 million tonnes, after subsidies were cut for the first time in 15 months to rein in the fiscal deficit.
Also heavy rains curbed demand from farmers for diesel-driven water pumps.
Oil product sales, a proxy for oil demand in Asia's third-largest oil consumer, totalled 11.53 million tonnes in September, according to the data posted on the website of the Oil Ministry's Petroleum Planning and Analysis Cell.
Gasoline consumption eased to an annual 2.5 percent growth, the slowest rate since January, to 1.23 million tonnes in September, when car sales fell by 5.4 percent, a second straight month of declines.
The Society of Indian Automobile Manufacturers has slashed its 2012/13 sales growth forecast for cars, motorcycles and commercial vehicles as high interest rates and slowing economic growth continue to stifle the industry.
India's oil product demand rose an annual 5.9 percent in April-September, lower than the estimated 6.1 percent for 2012/13, the highest in five years, predicted by the government, as the country's thrust on infrastructure to spur the economy is likely to boost demand for industrial fuels.
India's September naphtha consumption rose 6.4 percent from a year earlier to 968,000 tonnes, while that of kerosene fell 5.3 percent to 622,000 tonnes.
In September, India also capped the number of subsidised cooking gas cylinders per household to six per year meaning any cylinders bought over this ceiling will be at market rates, which could almost double the price.
India is gradually replacing heavily subsidised kerosene with cleaner cooking gas, consumption of which rose by 1.7 percent in September to 1.28 million tonnes.