Govt cuts excise duty on petrol, exempts diesel amid crude oil price rise; Hardeep Singh Puri denies lockdown rumours

The government has cut excise duty on petrol to ₹3 a litre and exempted diesel from the duty as it looks to shield consumers from the impact of rising global crude prices amid the ongoing war in the Middle East.

Global crude prices have climbed by almost 50% since the United States of America and Israel launched military strikes against Iran on February 28, triggering retaliatory actions from Tehran.

In a notification issued late on March 26, the Finance Ministry cut excise duty on petrol to ₹3 a litre from ₹13 a litre earlier, while the levy on diesel has been slashed to nil from ₹10 earlier. The duty cuts are effective immediately, the ministry said.

Despite the spike in international prices, retail pump rates have not been changed, putting a strain on the finances of oil companies.

To give relief to oil companies, the government has cut excise duty on petrol and diesel.

Taking to X, Finance Minister Nirmala Sitharaman said that this move will protect consumers from a rise in prices. "Further, duties have been imposed on exports of Diesel at ₹21.5 per litre and on ATF at ₹29.5 per litre. This will ensure adequate availability of these products for domestic consumption. The Parliament has been notified about the same," she said.

Hardeep Singh Puri, Union Minister for Petroleum and Natural Gas, said that amid rising crude oil prices, the government had two options: either increase prices for citizens or bear the brunt on its finances so that Indians are insulated from the international volatility.

"Government has taken a huge hit on it taxation revenues to ensure very high losses of oil companies (approximately ₹24/litre for petrol and ₹30/litre for diesel) at this time of sky high international prices are reduced. At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed and any refinery exporting to foreign nations will have to pay export tax," he said.

Govt dismisses lockdown rumours amid Middle East war

The petroleum minister also dismissed rumours of a possible lockdown due to a US-Israel-Iran war as "completely false". He said that the government is fully prepared to handle emerging challenges.

"Rumours of a lockdown in India are completely false. Let me state this clearly, there is no such proposal under consideration by the Government of India. In such times, it is important that we remain calm, responsible, and united. Attempts to spread rumours and create panic in such a situation are irresponsible and harmful. Rumours of a lockdown in India are completely false," Puri added.

International oil prices touched USD 119 per barrel earlier this month on the intensifying Iran war, before pulling back to around USD 100 a barrel.

India imports 88% of its crude oil needs and roughly half of its natural gas requirement. These mostly come via the Strait of Hormuz.

Following the US and Israeli attacks on Iranian government, military and nuclear facilities, Iran warned shipping away from the strait, and insurers withdrew coverage, effectively halting tanker movements.

Nayara Energy, which operates 6,967 of India's 102,075 petrol pumps, has decided to pass on part of the increase in input costs to consumers and has raised petrol prices by ₹5/litre and diesel by ₹3/litre. Petrol at Nayara pumps now costs ₹100.71 a litre and diesel costs ₹91.31 per litre.

Jio-bp, the fuel retailing joint venture of Reliance Industries and BP Plc that owns 2,185 outlets, has, however, so far not raised prices despite incurring heavy losses on the sale of petrol and diesel.

State-owned fuel retailers, who control about 90% of the market, continue to keep rates frozen. A litre of normal petrol in Delhi continues to cost ₹94.77, while the same grade diesel comes for ₹87.67 a litre.