Government Cuts Excise Duty On Petrol And Diesel

30 Mar 2026 CW Team

The Government of India cut excise duty by Rs 10 per litre on petrol and diesel with immediate effect to respond to a sharp rise in international crude prices. Brent crude rose from about USD 70 to around USD 122 per barrel in a month, an increase of around 75 per cent caused by conflict in West Asia and supply disruptions. Retail pump prices will remain unchanged as the cut is aimed at reducing losses borne by public sector oil marketing companies (OMCs).

OMCs - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - have been supplying fuel below cost, absorbing under-recoveries of about Rs 26 per litre for petrol and Rs 81.90 per litre for diesel. The combined daily under-recovery for OMCs is roughly Rs 24 billion (bn) (Rs 2,400 crore) and the excise cut offsets Rs 10 per litre of those losses, supporting uninterrupted supplies. The measure seeks to sustain operations and prevent supply disruption at domestic pumps.

The Government has also imposed an export levy on diesel to discourage exports and prioritise domestic refinery output while international diesel prices remain high. Authorities said the decision reflects a choice to bear fiscal costs to insulate consumers, noting fuel price rises of 30 to 50 per cent across South and South-East Asia, 30 per cent in North America and 20 per cent in Europe since the crisis began. The action follows the same principle used after the Russia-Ukraine conflict of 2022 when central taxes were reduced to protect households and industry.

The Minister for Petroleum and Natural Gas indicated that the Government opted to absorb revenue losses rather than pass sharp price increases to citizens and will monitor developments closely. Officials said the levy and excise adjustment aim to moderate export incentives and preserve domestic supplies. Further measures may be adopted if global volatility threatens supply stability or price protection for households and businesses.

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