Fuel Prices Drop? Govt Cuts ₹10 Excise Duty on Petrol & Diesel

The Government of India has reduced excise duty on petrol and diesel by ₹10 per litre each, in response to rising global crude oil prices. The decision comes amid ongoing volatility in international energy markets linked to geopolitical tensions in West Asia. Following the revision, the special additional excise duty on petrol has been reduced to ₹3 per litre from ₹13 earlier, while the levy on diesel has been cut to zero from ₹10 per litre.
The move by the Indian government is aimed at containing the impact of rising crude oil prices on the domestic market. International oil prices have surged sharply, rising by nearly 50% in recent weeks, driven by supply concerns and disruptions in key shipping routes such as the Strait of Hormuz caused by the war in West Asia. Oil marketing companies had not revised retail fuel prices despite higher input costs, resulting in increasing losses. The duty cut is expected to reduce this burden on the Oil marketing companies without requiring an immediate increase in pump prices.

IOCL Mathura Oil Refinery. Image Source: PTI

 
The reduction in excise duty will have a direct impact on government revenues. Reports suggest that a ₹10 per litre cut could lead to an annual revenue shortfall of around ₹1.5-1.6 lakh crore, depending on consumption levels. To offset part of this impact and ensure adequate domestic supply, the government has also imposed export duties on petroleum products. Diesel exports will attract a levy of ₹21.5 per litre, while aviation turbine fuel (ATF) exports will be taxed at ₹29.5 per litre.

Crude oil prices have surged sharply in recent weeks, crossing the $100 per barrel mark following the escalation of violence in West Asia. The disruption in supply chains has increased pressure on oil-importing countries, including India, which relies heavily on crude imports routed through the Hormuz corridor. The price of petrol and diesel in India is influenced by multiple factors, including global crude prices, exchange rates, taxes, and dealer margins. While the excise duty cut reduces the tax component, it will not automatically translate into an equivalent reduction in retail fuel prices as the fuel suppliers will use the cut in excise duty to offset their losses caused by the hike in crude oil prices.The Indian Government's latest intervention will help manage fuel costs and stabilise prices in the domestic market amid continued volatility in global oil prices.

Source: https://www.drivespark.com/four-wheelers/2026/india-cuts-excise-duty-on-petrol-diesel-by-10-rupees-litre-no-price-change-at-the-pumps-083183.html