In a significant step to tackle rising global crude oil prices, the Indian government has announced a sharp reduction in fuel excise duties, aiming to protect consumers while supporting oil marketing companies.
As per a March 27 notification, the Centre has reduced the special excise duty on petrol from ₹13 per litre to ₹3 per litre. In a major relief move, the ₹10 per litre excise duty on diesel has been completely removed.
The decision comes as oil marketing companies like Indian Oil continue to face heavy losses, estimated at around ₹24 per litre on petrol and ₹30 per litre on diesel, due to frozen retail prices since 2022. The duty cut is expected to offset these losses without increasing pump prices for consumers.
Petroleum Minister Hardeep Singh Puri highlighted the global surge in crude oil prices, which have jumped from around $70 per barrel to nearly $122 per barrel within a month. He noted that fuel prices have surged worldwide, with Southeast Asian countries witnessing hikes of 30-50%.
"The government has chosen to absorb the burden rather than pass it on to citizens," Puri emphasized.
The Modi government, officials said, faced two options, either sharply increase fuel prices, as many other nations have done, or take a financial hit to shield Indian citizens from global volatility. Continuing its approach over the past four years since the Russia-Ukraine conflict, the Centre has opted to bear the impact on its own finances.
Prime Minister Narendra Modi has decided to prioritize consumer protection once again, even as it results in a significant reduction in tax revenues. The move reduces the financial strain on oil companies while keeping fuel prices stable for the public.
At the same time, the government has imposed an export tax on petroleum products. With international fuel prices soaring, refineries exporting petrol and diesel will now be required to pay export duties, ensuring domestic supply and preventing windfall gains from global markets.
However, the decision has triggered political reactions, with critics questioning its timing ahead of elections and urging state governments to cut VAT further to extend relief.
Despite the debate, the move is being seen as a major intervention to stabilize India's fuel market amid an unprecedented surge in global energy prices. India has taken a visionary decision for the well-being of its citizens and its rapidly growing economy.
