The shutdown entered its third day after talks failed late on Thursday between the government and officials of state-run firms that dominate India's energy sector and control almost the entire supply of transport fuels, natural gas and domestic crude.

Up to 80 per cent of petrol stations in large cities like Mumbai, Delhi, Bangalore and Kolkata had run out of stocks and supplies to airlines may also fall, industry officials said.

"We are getting a large-scale dry out of petrol stations across the country. Over the night and this morning a large number has gone dry," said N. Srikumar, executive director for corporate communications at state-run Indian Oil Corp.

Alongside a separate truckers strike, the oil sector shutdown has inconvenienced millions of people and threatens to push up prices of food and commodities across the country.

Officials at IOC, which runs about 18,000 of India's 35,000 petrol pumps, and other state-run firms such as Oil and Natural Gas Corp began the strike on Wednesday.

The few petrol stations that had stocks struggled to meet the heavy rush of motorists.

"I had to work till 3:00 a.m. because there was a long queue of vehicles trying to tank up," said Dhruva Gharai, the owner of a gas station in Kolkata.

Some petrol stations reported highest-ever daily sales as motorists filled up in panic. "It will take at least a week for things to normalise," Gharai said.

A spokesman for Bharat Petroleum Corp Ltd said the company's fuel sales to pumps in Mumbai had fallen to 60-70 per cent of normal.

The situation is set to worsen as a few managerial staff are struggling to keep critical supplies flowing.

Srikumar said IOC was maintaining supplies to its top priorities, the railways, defence and airlines, but the senior managers who have been deployed for the task were struggling.

"It's turning out to be a little out of control at this point of time. They are senior management people. We have fanned out senior people. But 250-300 people cannot make up for 10,000 people who are on strike," Srikumar said.

Union leaders held talks for two hours late at night on Thursday, but could not come to an agreement.

Hindustan Petroleum Corp Ltd has not joined the strike but its operations are also affected by the truckers strike.

INDIA OIL STRIKE TALKS BREAK DOWN: IOC

Talks to end an oil workers strike that has triggered fuel shortages across India ended without an agreement early Friday, the head of the country's largest state-run refiner and marketer said.

"Some discussion took place, but we could not reach any conclusion," Chairman of India Oil Corp S. Behruia told reporters after a two hour meeting between India Oil Minister Murli Deora and representatives of the oil workers.

"But the door is open for further discussions," he said.

Petrol stations ran dry and flights were delayed at India's busiest airport as the strike by state oil company officials demanding better pay entered a third day.

State-run firms dominate India's energy sector, controlling almost the entire supply of transport fuels, natural gas and domestic crude oil.

The president of the Oil Sector Officials Association, Amit Kumar, said Friday that the "talks are inconclusive but the action is on. The (Oil Minister) has said he will apprise the prime minister of our demands."

About 30 per cent of gasoline stations in the capital, New Delhi, had run out of fuel, Petroleum Secretary R.S. Pandey said Thursday, while oil firms said there would be graver shortages if the strike continued.

Pandey said about 100 fuel stations in Mumbai, the financial hub, were not functioning, while officials at Mumbai airport said dozens of flights were delayed due to the strike.