Centre Cuts Petrol, Diesel Excise Duty by ₹10/litre, Retail Price Drop Unlikely

The Centre has reduced special additional excise duty on petrol and diesel by ₹10 per litre each, bringing the levy down to ₹3 per litre for petrol and eliminating it entirely for diesel.

However, the move is unlikely to result in lower retail fuel prices, as oil marketing companies are expected to absorb the benefit to offset mounting losses. Industry estimates suggest OMCs are currently losing around ₹48.8 per litre on fuel sales, largely due to the sharp rise in global crude prices.

International oil prices have surged massively over the past month, climbing from about $70 per barrel to around $122 per barrel amid geopolitical tensions in the Middle East. This has led to widespread fuel price increases globally.

The government said it chose to absorb part of the impact instead of passing the full burden on to consumers, continuing its approach of cushioning domestic fuel prices from global volatility.

India imports nearly 90% of its crude oil requirements, making it highly vulnerable to geopolitical tensions in West Asia. The ongoing conflict and the near-blockade of the Strait of Hormuz, a critical chokepoint for global oil trade, are affecting the country's economy.

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According to estimates, every one-dollar increase in crude oil prices per barrel over a full year can add around ₹16,000 crore to India's annual oil import bill, putting pressure on the current account deficit, the rupee, and overall macroeconomic stability.

In a fresh report released this week, Goldman Sachs Global Investment Research has sharply revised its outlook for the Indian economy due to the energy price shock. The global investment bank now expects India's consumer price index (CPI)-based inflation to average 4.6% in 2026, up from the 4.2% projection made on 13 March.

The government has reiterated that there is no immediate risk of fuel shortages, with sufficient stock levels currently in place.