Government cuts excise duty by Rs 10 on petrol and diesel amid West Asia war

NEW DELHI, MAR 27 : The government has reduced the additional excise duty on petrol and diesel, offering relief at a time when fuel prices have been a concern due to the ongoing conflict in West Asia.

As per a government order dated Thursday, the excise duty on petrol has been cut to Rs 3 per litre from Rs 13 per litre earlier, a reduction of Rs 10 per litre.

Similarly, the excise duty on diesel has been brought down to Rs 0 per litre from Rs 10 per litre earlier, also marking a Rs 10 per litre cut.

However, petrol and diesel prices at the pump will remain unchanged, as the tax reduction is being used to offset significant losses incurred by oil marketing companies.

EXCISE DUTY CUT AMID WEST ASIA TENSIONS

The move comes at a time when global crude oil prices remain volatile after a sharp surge linked to the conflict in West Asia.

Late-night comments from US President Donald Trump, indicating that talks with Iran were going “very well” and that there would be a pause in attacks, have helped calm some concerns in the oil market.

As a result, crude prices have seen some cooling, reducing immediate pressure on fuel costs for countries like India that depend heavily on imports.

The duty cut appears to be aimed at managing volatility while protecting consumers indirectly.

The government has defended the move as a necessary step to shield consumers from global price shocks. Oil Minister Hardeep Singh Puri said international crude prices had surged sharply in the past month, rising from around $70 per barrel to nearly $122 per barrel, leading to significant fuel price increases globally.

He noted that the government faced a choice between passing on the full impact to consumers or absorbing part of the shock, adding that the duty cut reflects an effort to ease pressure on both consumers and oil companies.

EXPORT TAXES REJIGGED

Alongside the excise duty changes, the government has also revised export taxes on key petroleum products. The diesel export tax has been increased to Rs 21.5 per litre, while aviation turbine fuel, or ATF, export tax is now set at Rs 29.5 per litre. Petrol export tax continues to remain nil.

At the same time, exports by public sector units to neighbouring countries, including Nepal, Bhutan, Bangladesh and Sri Lanka, will remain exempt from these duties.

In a parallel move, the government has introduced relief measures for the aviation sector by making domestic aviation fuel tax-exempt and extending basic duty relief to foreign-going aircraft.

This effectively offers 100% tax exemption on fuel for such operations and is aimed at keeping Indian airports competitive with global hubs for refuelling while improving the overall economics for airlines operating international routes.

OIL MARKETING COMPANIES IN FOCUS

Shares of some oil marketing companies (OMCs) rose initially following these developments but could not sustain gains due to the bloodbath on Dalal Street.

It may be noted that despite recent gains, these stocks have been under pressure in recent weeks. HPCL had touched its 52-week low earlier this week, while BPCL and IOC continue to trade well below their 52-week highs.

The duty changes could influence their margins and business outlook, depending on how crude prices and retail fuel pricing evolve.

-PTI