Government Reduces Excise Duty on Petrol, Exempts Diesel Amid Global Oil Price Surge

Government Reduces Excise Duty on Petrol, Exempts Diesel Amid Global Oil Price Surge​

Excise Duty Changes​

New Delhi, March 27 – The government has implemented excise duty reductions on petrol and completely exempted diesel, aiming to provide support to oil marketing companies including HPCL, BPCL, and IOC. The measures come amid rising global crude prices following the Middle East conflict.

A notification from the Finance Ministry, dated March 26, details the changes. The excise duty on petrol has been lowered to ₹3 per litre, a decrease from the previous rate of ₹13 per litre. Simultaneously, the excise duty on diesel has been reduced to zero, a reversal from the previous levy of ₹10 per litre. These changes are effective immediately.

Impact of Rising Crude Prices​

Indian fuel marketing companies have faced significant challenges due to a near 50 per cent increase in international oil prices since February 28, triggered by military actions in the Middle East. Rating agency ICRA noted that if the average crude oil price reaches USD 100-105 per barrel, retailers would experience losses of ₹11 per litre on petrol and ₹14 per litre on diesel. International oil prices previously touched USD 119 per barrel.

Current Petrol and Diesel Prices​

As of March 27, a litre of normal petrol in Delhi costs ₹94.77, while a litre of diesel is priced at ₹87.67.

Supply Chain Disruptions​

India imports approximately 88 per cent of its crude oil needs and roughly half of its natural gas requirement, primarily through the Strait of Hormuz. Recent disruptions to the strait, caused by Iran’s blockage and insurer withdrawal of coverage, have halted tanker movements.

Retailer Responses​

Nayara Energy, operating 6,967 petrol pumps, has begun passing on increased input costs to consumers. Petrol at Nayara pumps now costs ₹100.71 per litre, and diesel costs ₹91.31 per litre. Jio-bp, a joint venture of Reliance Industries and BP Plc, with 2,185 outlets, has not yet raised prices despite incurring substantial losses on the sale of petrol and diesel. State-owned fuel retailers, controlling approximately 90 per cent of the market, maintain frozen rates.