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New Delhi: In a calibrated response to the ongoing West Asia crisis and its impact on energy supplies, the Government of India has cut excise duty on petrol and diesel by ₹10 per litre each, while simultaneously tightening export-related tax benefits to ensure domestic availability and price stability.
Announcing the decision, Finance Minister Nirmala Sitharaman said the move is aimed at protecting consumers from global price shocks triggered by disruptions in crude and LPG supply chains.
Duty Cut to Offset Global Supply Shock
The excise duty reduction comes at a time when the West Asia conflict has disrupted key energy routes, particularly affecting supplies through the Strait of Hormuz.
Officials said the tax cut is designed to absorb the inflationary impact of rising global fuel prices and prevent a direct burden on households and transport sectors.
“PM Modi has ensured citizens are protected from supply shocks and rising costs of essential commodities,” Sitharaman said.
Export Curbs to Prioritise Domestic Supply
Alongside the duty cut, the Centre has:
- Imposed ₹21.50/litre duty on diesel exports
- Imposed ₹29.50/litre duty on aviation turbine fuel (ATF)
- Withdrawn tax rebate and duty exemption benefits for export of petrol, diesel and ATF
The amendments to the Central Excise Rules, 2017, effectively block exporters from claiming refunds or exporting fuel without paying duty.
However, supplies by public-sector oil companies to neighbouring countries such as Nepal, Bhutan, Bangladesh, and Sri Lanka have been exempted, signalling India’s strategic commitments in the region.
LPG Allocation Boost to Ease Industrial Pressure
The move is complemented by a parallel intervention from the Ministry of Petroleum and Natural Gas, which has increased commercial LPG allocation to 70% of pre-crisis levels, as reflected in the official communication (see above).
According to the letter issued by Petroleum Secretary Dr Neeraj Mittal:
- An additional 20% has enhanced the existing allocation of 50%
- Priority sectors include steel, automobile, textiles, chemicals and plastics
- Focus is on industries where LPG cannot be substituted by natural gas
- States implementing PNG (piped natural gas) reforms get additional allocation incentives
This step aims to stabilise industrial operations and reduce pressure on energy-intensive sectors impacted by supply disruptions.
Dual Strategy: Price Shield + Supply Management
Taken together, the Centre’s approach reflects a two-pronged strategy:
- Demand-side relief → Excise duty cut to keep retail prices in check
- Supply-side control → Export restrictions and LPG allocation boost
Officials say the measures are intended to prevent hoarding, ensure domestic availability, and maintain economic stability during the ongoing geopolitical crisis.
With fuel prices closely tied to inflation and economic activity, the government’s intervention is expected to cushion consumers and industry alike, even as global uncertainties persist.
