India Cuts Fuel Taxes as Iran War Shakes Global Oil Supply

The Finance Ministry has sharply reduced special excise Taxes duty on fuel, cutting petrol duty from ₹13 to ₹3 per litre and bringing diesel duty down from ₹10 to zero. The government issued the order on Thursday through amendments to central excise rules. Officials said the revised duty structure has taken effect immediately. The move aims to ease pressure on oil companies facing rising global costs.

Authorities introduced the changes as supply disruptions intensified due to the ongoing US-Iran conflict. The government stated that it acted in public interest to stabilize the domestic energy market. Rising crude oil prices and strained supply routes have added urgency to the decision. Officials expect the measure to support the broader economy during volatility.

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Centre eases Taxes burden amid crude surge

Despite the duty cuts, retail fuel prices are unlikely to change immediately at petrol pumps. The order also addressed aviation turbine fuel, setting a special additional excise duty at ₹50 per litre. However, exemptions in specific cases reduce the effective rate to ₹29.5 per litre. The government continues to monitor fuel pricing dynamics closely.

Explaining the decision, Petroleum Minister Hardeep Singh Puri said the government chose to absorb financial strain instead of passing the burden to citizens. He noted that global crude prices surged from around $70 to over $120 per barrel within a month. Many countries responded with sharp fuel price hikes, but India opted for fiscal intervention. He credited Narendra Modi for prioritizing consumer protection.

Puri added that the government accepted revenue losses to offset heavy under-recoveries of oil companies. He also confirmed the imposition of export taxes on refined fuel to manage domestic supply. He acknowledged the role of Nirmala Sitharaman in executing the policy. The government aims to contain inflation and shield the economy from global energy shocks.

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