India Cuts Fuel Tax, Absorbs Oil Price Hike to Aid Consumers

ENERGY
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AuthorKavya Nair|Published at:
India Cuts Fuel Tax, Absorbs Oil Price Hike to Aid Consumers
Overview

India is absorbing the sharp rise in global crude oil prices, driven by the West Asia crisis, to protect consumers. With crude oil jumping to $122 per barrel, causing global fuel price hikes, the government will absorb losses of up to ₹30 per litre on diesel and ₹24 on petrol. This includes a ₹10 excise duty cut on both fuels, aimed at maintaining domestic price stability and ensuring supply.

Government Steps In Amid Crude Price Surge

India is absorbing the significant impact of crude oil price surges, which rocketed from about $70 to $122 per barrel in just one month, due to the rising West Asia crisis. This global price shock has caused sharp fuel cost increases worldwide, with some nations in Southeast Asia and Africa seeing hikes of up to 50%. Petroleum Minister Hardeep Singh Puri explained via X that India faced a choice: pass on the spike or absorb it. The government chose to absorb financial hits to shield citizens from price volatility.

Fiscal Measures to Ease Consumer Burden

Finance Minister Nirmala Sitharaman also announced via X that the central government reduced excise duty on petrol and diesel by ₹10 per litre each. This move, combined with absorbing losses of about ₹24 per litre on petrol and ₹30 per litre on diesel, aims to ease the pressure on consumers and oil marketing companies. To secure local supply amidst higher international prices, export taxes have been implemented. A levy of ₹21.5 per litre on diesel exports and ₹29.5 per litre on Aviation Turbine Fuel (ATF) exports will prevent refiners from selling these fuels abroad.

Supply Assurances and Buffer

The government has strongly refuted false reports of panic buying and long queues at fuel stations, denying any claims of shortages. India maintains strong energy reserves, holding about 60 days of crude oil stock and one month of LPG supply, offering ample protection against global disruptions. State-run oil marketing companies confirmed supplies remain steady. To help dealers manage cash flow during any temporary logistical issues, the government has increased credit availability, keeping fuel flowing across the country.

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