Excise duty cut on petrol and diesel, but no relief for consumers; government explains reason

New Delhi (The Uttam Hindu): The central government has clarified that despite a reduction in excise duty on petrol and diesel, there will be no change in retail fuel prices for consumers. Instead, the benefit of the duty cut will be used to offset losses incurred by oil companies.

According to the Ministry of Petroleum and Natural Gas, the move will directly help reduce under-recoveries of government oil marketing companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. These companies are currently selling petrol and diesel at prices significantly lower than their actual cost.

Due to high international crude oil prices, oil companies are reportedly incurring losses of around ₹26 per litre on petrol and ₹81.90 per litre on diesel. Overall, the daily loss borne by these companies is estimated at approximately ₹2,400 crore.

The ministry stated that the ₹10 per litre reduction in excise duty will help partially compensate these losses, allowing oil companies to continue fuel supply without disruption while keeping retail prices stable.

The government has reduced excise duty by ₹10 per litre on both petrol and diesel with immediate effect. This decision comes in response to a sharp rise in global crude oil prices, which have surged by nearly 75% in less than four weeks—from about $70 per barrel to around $122 per barrel—amid tensions in West Asia and disruptions in global energy supply chains.

Comparatively, fuel prices have risen sharply across the world since the crisis began—by 30–50% in South and Southeast Asia, 30% in North America, and 20% in Europe. India, however, has maintained price stability, which comes with a financial cost that the government has chosen to bear.

Earlier, Finance Minister Nirmala Sitharaman stated that the excise duty cut aims to shield domestic consumers from rising fuel costs amid geopolitical tensions.

Following the revision, excise duty on petrol has been reduced to ₹3 per litre from ₹13, while diesel duty has been brought down to zero from ₹10 per litre.

Additionally, the government has imposed export duties of ₹21.5 per litre on diesel and ₹29.5 per litre on aviation turbine fuel (ATF) to ensure adequate availability for domestic consumption.