In a significant policy move, the Centre has reduced excise duties on petrol and diesel, providing much-needed relief to oil marketing companies (OMCs) grappling with elevated global crude prices.
According to a notification issued by the Union Ministry of Finance, excise duty on petrol has been brought down sharply to ₹3 per litre from ₹13, while diesel has been made duty-free, reduced from ₹10 per litre. The revised rates have come into effect immediately. Additionally, the government has introduced a windfall tax of ₹21.5 per litre on diesel exports.
The decision comes at a time of heightened volatility in global energy markets, driven by escalating geopolitical tensions involving the United States, Israel, and Iran. The situation has intensified following Iran’s blockade of the Strait of Hormuz — a critical chokepoint responsible for nearly 20% of global oil and gas transit, estimated at 20–25 million barrels per day. India had been sourcing approximately 12–15% of its crude oil imports via this route prior to the disruption.
Despite the reduction in excise duties, there has been no immediate change in retail fuel prices.
The government has also revised the taxation structure for Aviation Turbine Fuel (ATF), introducing a Special Additional Excise Duty, with effective exemptions placing the rate at ₹29.5 per litre. These changes have been implemented from March 26.
Meanwhile, the Ministry of Petroleum and Natural Gas has reassured the public that there is no cause for concern over fuel availability. It confirmed that supply chains remain intact, with all fuel stations operating normally and adequate reserves of petrol and diesel maintained across the country.
