The Centre on Thursday announced a Rs 10-per-litre reduction in excise duty on petrol and diesel with immediate effect, a fiscal intervention aimed at shielding India’s fuel supply system from an unprecedented surge in global crude oil prices.
The Ministry of Petroleum and Natural Gas said the move comes as international benchmark crude has soared from around USD 70 per barrel to nearly USD 122 per barrel in just four weeks, an escalation of almost 75 per cent driven by the West Asia conflict and severe disruptions to global energy supply chains.
Despite the excise duty cut, the Government made it clear that retail pump prices will remain unchanged.
The reduction will not translate into lower prices for consumers but will instead be used to partially offset the massive under-recoveries currently being absorbed by public sector oil marketing companies (OMCs), Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
According to official estimates, OMCs are incurring under-recoveries of Rs 26 per litre on petrol and Rs 81.90 per litre on diesel, resulting in a combined daily loss of nearly Rs 2,400 crore. “The excise reduction offsets Rs 10 per litre of these losses, ensuring OMCs can continue uninterrupted fuel supply while keeping retail prices stable,” the Ministry said.
The Government highlighted that India’s fuel price stability stands in sharp contrast to global markets, where rates have surged between 30–50 per cent across South and Southeast Asia, about 30 per cent in North America and 20 per cent in Europe since the crisis began. “India has held the line,” the Ministry noted, adding that such stability imposes a fiscal burden which the Centre has “opted to shoulder”.
Petroleum and Natural Gas Minister Hardeep Singh Puri said the Government faced a stark policy dilemma. “Either increase prices drastically for citizens of Bharat as all other nations have done, or bear the brunt on its finances so that the Indian citizen is insulated from international volatility,” he said.
“Prime Minister Shri Narendra Modi Ji decided to take a hit on Government finances to safeguard the Indian citizen. The Government has taken a substantial impact on its taxation revenues to reduce the high losses being faced by oil marketing companies at this time of sky-high international prices,” he added.
Reiterating this position in a post on X, Puri said global prices had risen sharply over the past month and noted that petrol and diesel costs had climbed “30–50 per cent in Southeast Asian countries, around 30 per cent in North America, 20 per cent in Europe, and about 50 per cent in African countries.” He said the Government chose to absorb the financial impact rather than replicate these steep hikes domestically.
“Prime Minister Narendra Modi… decided to take a hit on finances again to safeguard Indian citizens,” he said, adding that OMC losses were estimated at “around Rs 24 per litre for petrol and Rs 30 per litre for diesel” amid elevated global prices.
Alongside the excise reduction, the Government has introduced an export levy on diesel to discourage refiners from diverting supplies overseas at a time when global diesel prices have risen sharply. Any refinery exporting petrol or diesel will now be required to pay export tax, ensuring that domestic demand is prioritised and that fuel stations remain fully supplied.
Officials drew parallels with the approach taken after the 2022 Russia-Ukraine conflict, when excise reductions and OMC absorption of losses protected Indian consumers from global price shocks.
“The same principle governs today’s intervention: India’s citizens and industry should not bear the cost of disruptions they did not cause. The Government will continue to monitor the evolving global energy situation and take all measures necessary to maintain supply stability and price protection for Indian consumers,” the Ministry stated.
The government reaffirmed that India holds around 60 days of oil stock and dismissed reports of shortages as “deliberate misinformation campaign” aimed at triggering panic buying.
Meanwhile, Senior Congress leader Pawan Khera criticized the Centre, saying consumers have not seen any real relief.
He clarified that the government had reduced the ‘special additional excise duty’, a levy imposed on Oil Marketing Companies (OMCs), rather than cutting retail fuel prices. According to Khera, this move does not translate into immediate savings for the public. “What has actually been reduced is the ‘special additional excise duty’ – a levy paid by Oil Marketing Companies to the government. The words ‘special’ and ‘additional’ reveal how unnecessary this tax is,” he stated.
The Congress leader further pointed out that OMCs have been under financial strain since the escalation of conflict in West Asia, absorbing losses without passing them on to consumers. He said the government’s decision to reduce the levy was a delayed and limited measure. “The government has now merely agreed to share a small part of that burden by reducing the ‘special additional’ levy, that too almost a month later,” Khera said.
