The government on Friday announced a major excise duty cut on fuel, reducing taxes on petrol and diesel by ₹10 per litre each. This move brings the central excise duty down to ₹3 per litre on petrol, while diesel has effectively been reduced to zero.
Despite the significant tax relief, fuel prices at petrol pumps are unlikely to decrease immediately for most consumers. According to industry sources, oil marketing companies (OMCs) are expected to absorb the benefit of the excise duty cut to offset substantial losses incurred on fuel sales.
Currently, OMCs are facing losses of nearly ₹48.8 per litre on petrol and diesel, primarily due to the sharp rise in global crude oil prices. Brent crude, the international benchmark, has surged past the $100 per barrel mark, driven by geopolitical tensions including the US-Israel conflict involving Iran and disruptions in the Strait of Hormuz.
Petroleum Minister Hardeep Singh Puri highlighted the global impact of rising crude prices in a detailed post, noting that prices have jumped from around $70 per barrel to approximately $122 per barrel in just one month. As a result, fuel prices have increased significantly worldwide—by 30–50% in Southeast Asia, around 30% in North America, 20% in Europe, and nearly 50% in Africa.
He further explained that the government faced a critical choice: either pass on the steep price hike to Indian consumers, as seen in other countries, or absorb the financial burden to shield citizens from global market volatility. The decision, he emphasized, reflects the government's effort to protect consumers from rising international fuel costs.
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