The government of India has cut the special additional excise duties on petrol and diesel, in a move seemingly to reduce losses of oil companies amid the Middle East conflict. In a government order on Thursday, the finance ministry reduced the special excise duty on petrol to ₹3 per litre from ₹13 earlier. It also cut the duty on diesel to zero from ₹10.
Finance minister Nirmala Sitharaman said the central excise duty on petrol and diesel for domestic consumption has been reduced by ₹10 per litre each in view of the West Asia crisis, This will provide protection to consumers from rise in prices, she said, adding that Prime Minister Narendra Modi has always ensured that citizens are protected from vagaries of supply and costs of essential goods.
Further, duties have been imposed on exports of Diesel at ₹21.5 per litre and on Aviation Turbine Fuel (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 said on X.
The notification comes amid supply disruptions due to the ongoing US-Iran war. “…the Central Government, being satisfied that it is necessary in the public interest so to do…,” reads a part of the order.
{{/usCountry}}The notification comes amid supply disruptions due to the ongoing US-Iran war. “…the Central Government, being satisfied that it is necessary in the public interest so to do…,” reads a part of the order.
{{/usCountry}}The changes were notified through amendments to central excise rules and duty structures, which “shall come into force with immediate effect,” as per the Gazette notification.
There is unlikely to be any immediate impact on pump prices.
On aviation turbine fuel (ATF), the order states: “Aviation Turbine Fuel Rs. 50 per Litre” as special additional excise duty, alongside exemptions that cap the effective rate at “Rs. 29.5 per litre” in certain cases.
‘Bold decision’: Govt explains reason behind excise duty cut
The excise duty move comes amid the ongoing war in the oil-rich Gulf, sparked by US-Israeli strikes on Iran, which has pushed global crude oil prices above $100 and disrupted key supply routes like the Strait of Hormuz - the currently choked waterway through which a fifth of world's oil and gas requirements travel.
Speaking on the excise duty cut, Minister of Petroleum and Natural Gas Hardeep Puri said on X that the Modi government had two choices amid rising crude prices - either increase prices drastically for citizens of Bharat as all other nations have done or bear the brunt on its finances so that Indian citizen is insulated from international volatility.
“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,” Hardeep Puri said.
“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 citizen is insulated from international volatility,” he said.
Puri said PM Modi, “in keeping with his Government’s commitment of 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.”
“Government has taken a huge hit on it taxation revenues to ensure very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky high international prices are reduced. 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,” Puri said, thanking PM Modi and Finance Minister Nirmala Sitharaman for a decision he called “timely, bold and visionary”.
India, like other countries, faces rising import costs and inflation risks due to its dependence on imported energy, and such a move by government - to cut excise duties - is aimed at cushioning consumers and the broader economy from this shock by offsetting higher crude prices and preventing a sharp spike in retail fuel rates.