The central government on March 27, 2026, announced a major cut in excise duty on petrol and diesel to reduce the impact of rising global oil prices. The duty on petrol has been reduced from ₹13 to ₹3 per litre, while diesel duty has been cut from ₹10 to zero, effectively lowering taxes by ₹10 per litre on both fuels.
This move comes as crude oil prices have surged due to ongoing tensions in the Middle East. Supply concerns, especially around key oil routes, have pushed prices above $100 per barrel. As India depends heavily on oil imports, this has increased pressure on fuel prices and the overall economy.
The government said the decision was taken to protect consumers from a sharp rise in petrol and diesel prices. By reducing taxes, it aims to absorb part of the global price increase instead of passing the entire burden onto the public.
However, the benefit may not be immediately visible at petrol pumps. Oil marketing companies like Indian Oil, BPCL, and HPCL are currently facing losses because they have not fully raised fuel prices in line with global crude rates. Industry experts believe these companies may use the tax relief to recover losses before lowering retail prices.
Crude oil prices have seen a steep rise in recent weeks, jumping from about $70 per barrel to over $100. This sudden increase has made fuel costlier to produce and sell, creating challenges for both companies and the government.
To manage the situation, the government has also introduced export duties on petroleum products. This step is meant to ensure enough fuel supply within the country and to control price fluctuations.