According to the report, prices of the two fuels have risen sharply in Bhutan as result of the decision and its government has written to India's External Affairs Minister Salman Khurshid on the issue.
It is not known why India took such a step, but there is speculation that the move aims at apparently punishing the Bhutanese government for hobnobbing with China.
The country's Prime Minister Jigme Thinley recently met his Chinese counterpart Li Keqiang in Brazil's capital Rio de Janeiro and imported 20 buses from the other neighbour.
The report, quoting a state-run Indian Oil Corporation official, said the subsidy was ended after the government said it would not reimburse the subsidy component of kerosene and LPG.
