HUGE: Special Additional Excise Duties On Petrol Cut To Rs 3 From Rs 13, Diesel To Zero From Rs 10

New Delhi: Amid rising global crude oil prices triggered by escalating tensions in West Asia, the Centre has slashed special additional excise duty on petrol and diesel to ease pressure on oil marketing companies (OMCs). However, the government clarified that there will be no immediate change in retail fuel prices for consumers.

According to the latest decision, the special additional excise duty on petrol has been reduced sharply from Rs 13 per litre to Rs 3 per litre, while the duty on diesel has been cut from Rs 10 per litre to zero.

The action arrives amid a worsening global energy crisis sparked by the ongoing conflict between the US and Israel versus Iran, global crude prices surged past the $100 per barrel mark, largely driven by supply concerns amid the ongoing US-Iran conflict. The government’s intervention aims to shield domestic fuel retailers from mounting under-recoveries rather than passing on the benefit directly to consumers.

The excise duty cut is a calibrated step to absorb the global oil shock, ensuring that the burden of volatile international prices does not immediately fall on citizens. Instead, the relief is being directed towards OMCs, which have been under financial strain due to selling fuel at controlled rates despite rising input costs.

This indicates that there is no variation in the prices of petrol or diesel pumps. This excise reduction initiative aims to assist OMCs in reducing their losses during the current Middle East conflict, which has led to fluctuations in the oil market due to the near blockage of the Strait of Hormuz.

The Central Government, also exempted Aviation Turbine Fuel, from the whole of the Special Additional Excise Duty providing relief to the Aviation sector. Windfall tax on export of aviation turbine fuel has been fixed at Rs 29.5 per litre.

Govt Absorbs Global Oil Shock to Protect Consumers

In a post on X, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said that international crude oil prices have surged sharply over the past month-from around $70 per barrel to nearly $122-leading to steep fuel price hikes across the world. He noted that prices have risen by 30-50% in Southeast Asia, around 30% in North America, 20% in Europe, and nearly 50% in Africa. 

Highlighting the government’s approach, he said the Government of India chose to absorb the financial burden instead of passing it on to citizens, unlike many other countries. Under the leadership of Narendra Modi, the government decided to take a hit on its own revenues to shield Indians from global volatility. 

He added that the move would help reduce heavy losses faced by oil companies estimated at around Rs 24 per litre for petrol and Rs 30 per litre for diesel while also introducing export taxes on refined fuel to prevent excessive gains from overseas sales.

The Finance Minister also reiterated the government's swift action on oil price cuts. "In view of the West Asia crisis, the central excise duty on petrol and diesel for domestic consumption has been reduced by Rs 10 per litre each. This will provide protection to consumers from rise in prices. 

Hon. PM @narendramodi 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 Rs 21.5 per litre and on ATF at Rs 29.5 per litre. This will ensure adequate availability of these products for domestic consumption. The Parliament has been notified about the same," Nirmala Sitharaman said on X.

According to a statement released by the Ministry of Petroleum and Natural Gas, "All retail outlets are operating normally across the country", even as there were reports of panic buying in some areas due to rumours.

The ministry clarified that the country has adequate fuel supplies. "There are adequate stocks of petrol and diesel available at all Petrol Pumps in the country," the statement said, reiterating its advice to citizens "not to believe rumours."

The government also said that all refineries are operating at high capacity to ensure an uninterrupted energy supply. "All refineries are operating at high capacity, with adequate crude inventories in place," the ministry said, adding that domestic LPG production from refineries has been increased to support domestic consumption.

The decision provides temporary stability to fuel retailers and may prevent sudden retail price hikes in the near term. However, any future changes in pump prices will depend on global crude trends and geopolitical developments.

The government’s approach signals a balancing act-protecting consumers from price spikes while maintaining the financial health of oil companies during a period of heightened global uncertainty.