Government Cuts Excise Duty on Petrol, Diesel by ₹10/Litre to Cushion Consumers Amid Crude Oil Surge
New Delhi, March 27: The government has slashed excise duty on petrol and diesel by ₹10 per litre each to shield consumers from soaring global crude oil prices triggered by escalating tensions in the Middle East. The move is expected to cost the exchequer around ₹1.75 lakh crore annually.
In a parallel step, the government has reintroduced export duties on diesel and aviation turbine fuel (ATF) to ensure adequate domestic availability.
According to an official notification, the special additional excise duty on petrol has been reduced from ₹13 per litre to ₹3, while on diesel it has been cut from ₹10 per litre to nil.
At the same time, an export duty of ₹21.5 per litre has been imposed on diesel and ₹29.5 per litre on ATF. This levy was earlier introduced in July 2022 to curb windfall gains by refiners following geopolitical disruptions and was later withdrawn in December 2024.
However, unlike previous measures, no windfall tax has been imposed on domestic crude oil producers such as ONGC.
Post revision, the total excise duty on petrol now stands at ₹11.9 per litre, while diesel carries an excise duty of ₹7.80 per litre, factoring in various components such as basic excise duty, agriculture infrastructure cess, and road and infrastructure cess.
The duty cut comes at a time when global crude oil prices have surged nearly 50% this month, crossing the $100 per barrel mark amid supply disruptions linked to the ongoing Iran conflict.
Despite the spike in international prices, retail fuel prices in India had remained largely unchanged, leading to mounting losses for oil marketing companies and pressure on their working capital.
The excise reduction is expected to partially offset the need for a sharp increase in retail fuel prices. Estimates suggest petrol prices would otherwise need to rise by ₹24 per litre and diesel by ₹30 per litre to fully reflect global price trends.
According to ICRA, if crude oil averages $100–105 per barrel, fuel retailers could incur losses of ₹11 per litre on petrol and ₹14 per litre on diesel.
Global oil prices recently touched highs of $119 per barrel before easing to around $100.
Meanwhile, private fuel retailer Nayara Energy raised petrol prices by ₹5 per litre and diesel by ₹3 per litre, with petrol reaching ₹100.71 per litre and diesel ₹91.31 per litre at its outlets.
State-run oil companies, which dominate nearly 90% of the market, have so far kept retail prices unchanged. In Delhi, petrol continues to retail at ₹94.77 per litre, while diesel is priced at ₹87.67 per litre.
Finance Minister Nirmala Sitharaman said the excise duty cut is aimed at protecting consumers from rising fuel costs and ensuring price stability.
She also emphasized that export duties on diesel and ATF will help maintain sufficient domestic supply.
Oil Minister Hardeep Singh Puri highlighted that global crude prices have surged sharply from around $70 to over $120 per barrel in the past month, leading to significant fuel price hikes worldwide.
He noted that fuel prices have risen by 30–50% in Southeast Asia, 30% in North America, 20% in Europe, and up to 50% in Africa.
The government, he said, chose to absorb the financial burden rather than pass on the full impact to consumers, continuing its policy approach seen during previous global crises.
Officials added that the situation remains dynamic, and the government is closely monitoring global energy markets and supply chains to ensure uninterrupted availability of fuel and essential commodities.
The government also dismissed rumours of any lockdown, calling them baseless and urging citizens to avoid panic and misinformation.
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