Centre slashes excise duty amid global crude surge, but relief at fuel pumps remains uncertain as oil companies battle mounting losses
New Delhi: In a significant move aimed at cushioning the impact of soaring global crude prices, the central government has reduced excise duty on petrol and diesel by Rs 10 per litre. Following the revision, excise duty on petrol now stands at Rs 3 per litre, while diesel has effectively been brought down to zero excise duty.
The decision comes at a time when international crude oil markets are witnessing a steep surge, largely influenced by geopolitical tensions and supply disruptions. However, the big question remains, will this move translate into lower fuel prices for consumers?
Fuel Prices Unlikely to Drop Despite Duty Cut
Despite the substantial reduction in excise duty, petrol and diesel prices across India may not see an immediate decline. Industry experts indicate that the cut is primarily aimed at offsetting the losses incurred by Oil Marketing Companies (OMCs) rather than directly reducing retail prices.
Companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited have reportedly been under severe financial pressure, as they have not fully passed on the rising crude costs to consumers.
“The excise duty reduction is a balancing act, it prevents immediate price hikes rather than bringing down existing fuel prices,” industry sources explained.
Global Crude Surge Drives Policy Move
Before the recent escalation in tensions involving Strait of Hormuz, crude oil prices hovered around $60 per barrel. Currently, prices have surged past $100–$120 per barrel, significantly impacting global supply chains.
Disruptions in oil tanker movement and fears of prolonged instability have further intensified price volatility. While private players like Nayara Energy have already raised fuel prices, state-run firms have held back increases, absorbing the shock temporarily.
Relief for OMCs, Not Immediate for Consumers
The government’s move is being seen as a preventive measure to shield consumers from a sharp spike in fuel costs in the coming days. By lowering excise duty, authorities aim to give breathing space to OMCs, ensuring price stability rather than reduction.
For now, consumers are likely to continue paying existing fuel rates, but the duty cut could help avoid sudden hikes if crude prices remain elevated.
