New Delhi, March 27 – The government has cut excise duty on petrol and diesel by ₹10 per litre, shielding consumers from a price hike amid soaring global oil rates.
Excise on petrol has been reduced from ₹13 to ₹3 per litre, and on diesel from ₹10 to nil, leading to an estimated annual revenue loss of ₹1.75 lakh crore. Simultaneously, the government has reintroduced export duties on diesel and aviation turbine fuel (ATF), imposing ₹21.5 per litre on diesel and ₹29.5 per litre on ATF to curb windfall gains by refiners—a levy first applied in July 2022 and withdrawn in December 2024. Domestic crude producers, including ONGC, remain exempt from windfall taxes.
International crude prices have surged over 50% to above USD 100 per barrel due to escalating conflict in the Middle East. At current rates, petrol should have risen by ₹26 per litre and diesel by ₹81.90 per litre. While state-owned oil companies had been absorbing these costs, the situation became unsustainable, prompting the excise duty cut to offset price pressures. Pump prices, however, remain unchanged.
After the reduction, excise on petrol stands at ₹11.9 per litre (₹1.40 basic excise, ₹3 special additional excise, ₹2.50 agriculture infrastructure and development cess, ₹5 road infrastructure cess) and on diesel at ₹7.80 per litre (₹1.80 basic excise, ₹4 agriculture cess, ₹2 road infrastructure cess). With annual fuel sales of 175 billion litres (115 billion diesel, 60 billion petrol), the cut amounts to ₹1.75 lakh crore.
Record losses have hit oil companies due to crude prices rising almost 50% this month, fueled by the US-Israel conflict with Iran. Retailers had kept rates frozen, impacting working capital. The excise reduction offsets the required price increase of ₹24 per litre for petrol and ₹30 per litre for diesel. Rating agency ICRA notes that at USD 100–105 per barrel, retailers would face losses of ₹11 per litre for petrol and ₹14 per litre for diesel.
Private retailer Nayara Energy raised petrol by ₹5 per litre and diesel by ₹3 per litre, with current rates at ₹100.71 for petrol and ₹91.31 for diesel. State-owned companies, covering 90% of the market, continue to freeze prices—petrol in Delhi remains ₹94.77 per litre and diesel ₹87.67.
The Oil Ministry stated under-recoveries at current crude prices are ₹26 per litre for petrol and ₹81.90 per litre for diesel, with daily losses of roughly ₹2,400 crore absorbed by OMCs.
Finance Minister Nirmala Sitharaman said the duty cut protects consumers from price surges and ensures essential goods remain accessible. She added that export duties on diesel and ATF will secure domestic availability.
Oil Minister Hardeep Singh Puri highlighted global price surges from USD 70 to USD 122 per barrel over a month, with worldwide fuel price hikes of 20–50%. He emphasized that the government chose to bear financial losses to shield citizens, while export taxes prevent windfall gains from international sales.
Puri stressed that India is monitoring energy and supply chains closely, ensuring uninterrupted fuel and essential commodity availability. He dismissed rumors of a national lockdown, calling them “irresponsible and harmful,” and urged citizens to remain calm and united.
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