NEW DELHI: The Centre has reduced excise duty on petrol and diesel by ₹10 per litre each to shield consumers and oil marketing companies from soaring crude prices, even as it imposed export taxes on fuels to offset revenue losses.
The move comes amid a sharp surge in global crude prices, which have risen about 62% in March compared to February for Indian refiners. Fuel retailers such as Indian Oil, Hindustan Petroleum and Bharat Petroleum were incurring losses of around ₹24 per litre on petrol and ₹30 per litre on diesel.
To partly balance the revenue hit, the government has imposed an export duty of ₹21.5 per litre on diesel and ₹29.5 per litre on aviation turbine fuel (ATF). The levy aims to curb windfall gains for exporters and improve domestic availability as global supplies tighten, particularly after China’s export curbs.
Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Chaturvedi said the export duty is expected to generate about ₹1,500 crore in the first fortnight, while the excise cut will result in a revenue loss of over ₹7,000 crore. The export tax will be reviewed every two weeks in line with global price trends.
The new export duty will not apply to fuel shipments by public sector oil companies to Nepal, Bhutan, Bangladesh and Sri Lanka, nor to ATF supplied to foreign-bound aircraft.
Finance Minister Nirmala Sitharaman said the decision was taken in view of the “ongoing and evolving situation in West Asia” to ensure price stability. She added that the government would step up efforts to mobilise non-tax revenues while carefully managing the fiscal position.
India’s crude import cost has jumped from an average of $69 per barrel in February to $111.93 so far in March. While many countries have passed on the increase to consumers, Indian refiners had been absorbing losses after a period of strong profits.
Petroleum Minister Hardeep Puri said the government had taken a “huge hit” on tax revenues to reduce the burden on oil companies, while the export duty would ensure that refiners exporting fuel contribute during a period of high international prices.
Political reactions
The decision drew praise from BJP leaders, with Home Minister Amit Shah calling it an example of “people-centric governance” and a sensitive response to global fuel shortages. Defence Minister Rajnath Singh described it as a timely and decisive step amid rising energy costs worldwide.
However, the Congress criticised the move, calling it politically motivated. Party general secretary Jairam Ramesh argued that fuel prices were not reduced when global crude prices were low in the past and claimed the cut was timed ahead of assembly elections.
Congress MP Manish Tewari said the government’s revenue ultimately comes from taxpayers, while spokesperson Pawan Khera accused the Centre of benefiting from low crude prices over the years without passing on the gains to consumers.
