The Union government has reduced excise duty on domestic petrol and diesel by ₹10 per litre each to protect consumers from rising international oil prices, finance minister Nirmala Sitharaman said on Friday.
The duty cuts will reduce oil companies’ losses on auto fuels without any reduction in pump prices of petrol and diesel.
The government has also imposed duties on exports of diesel by ₹21.5 per litre and aviation turbine fuel (ATF) by ₹29.5 a litre to ensure vital fuel products are domestic available in view of the West Asia crisis that has witnessed disruptions in global energy supplies, the finance minister said.
“In view of the West Asia crisis, the central excise duty on petrol and diesel for domestic consumption has been reduced by ₹10 per litre each. This will provide protection to consumers from rising prices. Hon. PM @narendramodi has always ensured that citizens are protected from vagaries of supply and costs of essential goods,” Sitharaman said in a post on X.
Further, duties have been imposed on exports of diesel at ₹21.5 per litre and on ATF at ₹29.5 per litre, she said.
“This will ensure adequate availability of these products for domestic consumption. The Parliament has been notified about the same,” she added.
Benchmark crude oil soared about 48.22% to $108.01 a barrel on Thursday close from $72.87 before the start of the war in West Asia on February 28.
“As the ME [Middle East] conflict nears one month, its impact on Indian downstream players is becoming more visible, with petrol-diesel accounting marketing margins of OMCs turning negative, at – ₹25/45 per liter this fortnight,” Sabri Hazarika and Arya Patel of Emkay Global Financial Services Ltd said in a research report.
After the excise duty cuts, the special excise duty (SAD) on petrol and diesel effectively fell to ₹3 per litre and zero, respectively. To be sure, SAED is a levy that is not part of the divisible pool, hence entire impact of duty reduction would hit the centre’s revenue. The impact of the duty cuts, if maintained for an entire financial year, would amount to about ₹1,70,000 crore, an expert said requesting anonymity.
The current duty cuts came a year after the government raised SAED on petrol and diesel by ₹2 per litre each on April 8, 2025, in similar manner to garner about ₹34,000 crore in a year, without raising pump prices of fuels. This excise duty hike took place after the Centre had slashed excise duty to reduce pump prices of the fuels by ₹13 per litre and ₹16 a litre on petrol and diesel, respectively in two tranches in November 2021 and May 2022.
Petroleum minister Hardeep Puri on Friday said the oil marketing companies were losing approximately ₹24 per litre on petrol and ₹30 per litre on diesel, and current duty reduction will give them relief.
Deloitte India partner MS Mani said, “The excise duty cut has come timely, not only as a relief to OMCs, but also to the consumers. Unless the government would not have given excise duty relief, OMCs would be compelled to raise prices.” Yesterday, largest private fuel retail company Nayara Enegry raised petrol prices by ₹5 per litre and diesel by ₹3 in their 7,000-plus pumps, to partially recover their losses. HT reported it on Friday.
In a social media post, Puri said, “International crude prices have gone through the roof in the last 1 month from around 70 dollars/barrel to around 122 dollars/barrel. Consequently, petrol and diesel prices for consumers have gone up all over the world. Prices have increased by around 30%-50% in South East Asian countries, 30% in North American countries, 20% in Europe and 50% in African countries.”
“The Modi Government had two choices- either increase prices drastically for citizens of Bharat as all other nations have done or bear the brunt on its finances so that Indian citizens are insulated from international volatility. Hon’ble Prime Minister @narendramodi Ji, in keeping with his Government’s commitment of the last 4 years since the conflict in Russia-Ukraine started, decided to take a hit on its own finances again to safeguard the Indian citizen,” he said.
The government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies at this time of sky high international prices are reduced, he said.
“At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed and any refinery exporting to foreign nations will have to pay export tax. My gratitude to Hon’ble PM Narendra Modi Ji and Hon’ble FM @nsitharaman Ji for this very timely, bold and visionary decision!,” he added.
