India reduces fuel taxes and imposes export levy on diesel as global oil supply tightens. Govt assures steady supply, says refineries running at full capacity nationwide.
In a significant move at a time of global oil volatility, the Centre has slashed excise duty on petrol and diesel by ₹10 per litre each, bringing the rate down to ₹3 per litre for petrol and zero for diesel. It has also fixed a windfall tax of ₹21.5 per litre on diesel exports, according to an official notification issued on Thursday.
The decision comes as tensions in West Asia disrupt global energy flows. The ongoing US-Israel conflict with Iran, and Tehran’s blockade of the Strait of Hormuz, which is a key route for nearly a fifth of global oil and gas shipments, have pushed crude prices higher, putting pressure on importing countries like India.
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Before the current crisis, India sourced roughly 12-15 per cent of its crude oil through this route. With supplies under strain and prices rising sharply, oil marketing companies have been facing losses estimated at ₹48.8 per litre on fuel sales, prompting the government to step in.
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The official notification, issued under the Central Excise Act and Finance Act provisions, formalised the revised duty rates for petrol and diesel. However, retail fuel prices have not been changed yet.
As per the Gazette notification, “In exercise of the powers conferred by section 5A of the Central Excise Act, 1944 (1 of 1944) read with section 147 of Finance Act, 2002 (20 of 2002), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 05/2019-Central Excise, dated the 6th July, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section(i), vide number G.S.R. 488(E), dated the 6th July, 2019, namely; In the said notification, I. in the Table, (i) against Sl. No. 1, in column (4), for the entry, the entry “Rs. 3 per litre” shall be substituted, (ii) against Sl. No. 2, in column (4), for the entry, the entry “Nil” shall be substituted.”
In a related step, the government has also introduced a Special Additional Excise Duty on Aviation Turbine Fuel (ATF), with effective rates reduced to ₹29.5 per litre after exemptions. These changes took effect from March 26.
Petroleum and Natural Gas Minister Hardeep Singh Puri said international crude prices have surged sharply over the past month, from about $70 per barrel to nearly $122, pushing fuel prices up worldwide.
He noted that prices have risen by roughly 30-50 per cent in Southeast Asia, about 30 per cent in North America, 20 per cent in Europe, and up to 50 per cent in parts of Africa.
According to Puri, the government faced a choice: pass on the full burden of rising global prices to Indian consumers or absorb part of the shock through its own finances.
“…The Government has taken a huge hit on it taxation revenues to ensure very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky high international prices are reduced,” he said, adding that the move aligns with the Centre’s approach since earlier global disruptions.
Even as concerns grew over possible shortages, the government said fuel availability across the country remains stable and warned against panic buying.
The Ministry of Petroleum and Natural Gas said all fuel outlets are operating normally and that there are sufficient stocks of petrol and diesel nationwide. It added that refineries are running at high capacity and crude reserves are adequate to maintain an uninterrupted supply.
The ministry also noted that domestic LPG production has been increased to meet demand.
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