Excise duty on petrol, diesel reduced as crude prices rise

The Indian government has reduced special excise duty on petrol and diesel amid rising global crude prices. The decision comes as tensions in West Asia continue to disrupt global oil supply chains, with tanker movement through the Strait of Hormuz remaining constrained.

1. Duty cut aimed at offsetting impact of rising crude prices
2. Retail fuel prices may not see immediate reduction
3. India imports over 90 percent of its crude requirement

Excise duty cut announced

Petrol and diesel duties reduced

The finance ministry has reduced special excise duty on petrol to Rs 3 per litre from Rs 13 earlier. Duty on diesel has been cut to zero from Rs 10 per litre. The ministry did ​not say how much the duty cuts would cost the government, as per a Reuters report.

Economist Madhavi Arora of Emkay Global estimates the annualised fiscal impact at around Rs 1.55 trillion. She added that the duty cut could offset about 30-40 percent of annual losses incurred by oil marketing companies on auto fuels at current prices.

The duty cut is expected to help oil marketing companies manage rising input costs due to higher crude prices. As a result, retail prices of petrol and diesel are unlikely to see an immediate reduction and may remain at current levels.

Government denies shortage

Queues, panic buying reported at some fuel stations

The government has stated that there is no shortage of petrol or diesel and that supplies remain stable across the country. The Petroleum Ministry said India has around 60 days of fuel stock and termed reports of scarcity a “deliberate misinformation campaign.”

However, reports from some regions indicate long queues at fuel stations, with instances of panic buying and hoarding by consumers. In parts of Andhra Pradesh, some filling stations have begun rationing fuel for transport vehicles, citing supply delays and operational issues at depots.

Dealer associations have also flagged concerns over delayed supplies, warning that disruptions could lead to temporary shortages at select outlets if not addressed. Private fuel retailer Nayara Energy raised petrol prices by Rs 5 per litre and diesel by Rs 3 per litre ahead of the duty revision, while premium petrol and industrial diesel have also seen price increases, indicating pressure on fuel pricing.