Government Reduces Excise Duty on Petrol and Diesel Amid Rising Global Prices

In response to soaring global crude oil prices, the Indian government has announced a reduction in excise duty on petrol and diesel. The excise duty on petrol has been cut by Rs 3 per litre, while diesel is now exempt from duty altogether. This decision aims to protect consumers from the financial impact of rising oil prices, which have surged nearly 50% since military actions in the Middle East began. Despite these cuts, retail prices for fuel have remained stable, putting pressure on oil companies. The article explores the implications of these changes on the fuel market and consumer prices.

By Narendra Chaudhary Mar 27, 2026, 12:13 IST

Excise Duty Cuts Announced

Guwahati, Mar 27: In a move to alleviate the financial burden on consumers due to escalating global crude oil prices, the government has reduced the excise duty on petrol by Rs 3 per litre and completely exempted diesel from the duty. This decision comes in light of the ongoing conflict in the Middle East, which has significantly impacted oil prices.

Since the military actions initiated by the United States and Israel against Iran on February 28, global crude prices have surged nearly 50%.

According to a notification released on March 26, the Finance Ministry has lowered the excise duty on petrol from Rs 13 to Rs 3 per litre, while the duty on diesel has been eliminated, dropping from Rs 10. These changes are effective immediately.

Despite the rise in international oil prices, retail fuel prices have remained unchanged, putting pressure on oil companies' finances.

To support these companies, the government has implemented these excise duty reductions.

Following the announcement, shares of major fuel retailers such as IOC, BPCL, and HPCL saw an increase on the Bombay Stock Exchange.

A report from the rating agency ICRA indicated that if crude oil prices average between USD 100-105 per barrel, fuel retailers could face losses of Rs 11 per litre for petrol and Rs 14 per litre for diesel.

ICRA also suggested that the government might further reduce excise duties on petrol and diesel to stabilize retail prices, allowing oil companies to recover some of their refining losses.

Earlier this month, international oil prices peaked at USD 119 per barrel due to the escalating conflict in Iran, before settling around USD 100 per barrel.

India relies on imports for 88% of its crude oil and about half of its natural gas, primarily transported through the Strait of Hormuz.

In response to the US and Israeli strikes on Iranian facilities, Iran has issued warnings to shipping in the strait, leading insurers to withdraw coverage and halting tanker operations.

Nayara Energy, which operates a significant number of petrol stations in India, has opted to pass some of the increased input costs onto consumers, raising petrol prices by Rs 5 per litre and diesel by Rs 3 per litre. Currently, petrol at Nayara stations is priced at Rs 100.71 per litre, while diesel is at Rs 91.31.

Conversely, Jio-bp, a joint venture between Reliance Industries and BP Plc, has not increased its prices despite facing substantial losses on fuel sales.

State-owned fuel retailers, which dominate approximately 90% of the market, have kept their prices unchanged. In Delhi, a litre of regular petrol remains at Rs 94.77, while diesel is priced at Rs 87.67.