New Delhi: The Government has reduced the central excise duty on petrol and diesel for domestic consumption by Rs 10 per litre, while simultaneously imposing an export duty of Rs 21.5/litre on diesel and Rs 29.5/litre on Aviation Turbine Fuel (ATF) to ensure domestic availability. Announcing the decision on Friday in a post on X, Finance Minister Nirmala Sitharaman said, “In view of the West Asia crisis, the central excise duty on petrol and diesel for domestic consumption has been reduced by Rs 10 per litre each. This will provide protection to consumers from rise in prices. Hon. PM @narendramodi has always ensured that citizens are protected from vagaries of supply and costs of essential goods.”
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“Further, duties have been imposed on exports of Diesel at Rs 21.5 per litre and on ATF at Rs 29.5 per litre. This will ensure adequate availability of these products for domestic consumption. The Parliament has been notified about the same,” Sitharaman added. These duties will be reviewed on a fortnightly basis, said Vivek Chaturvedi, Chairman of Central Board of Indirect Taxes and Customs (CBIC).
After the last revision in April 2025, the excise duty stood at Rs 13 per litre for petrol and Rs 10 per litre for diesel. The duties now stand at Rs 3 per litre for petrol and Rs 0 for diesel. The move is aimed at cushioning the margins of state-run Oil Marketing Companies (OMCs) — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) — who have held petrol and diesel prices steady despite sharp volatility in crude oil prices, leading to under-recoveries.
In a post on X, Minister for Petroleum and Natural Gas Hardeep Singh Puri said that state-run OMCs were registering high under-recovery on both petrol and diesel. “Government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies at this time of sky-high international prices are reduced. At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed and any refinery exporting to foreign nations will have to pay export tax,” Puri said on X.
“At current international crude prices, under-recoveries stand at approximately Rs 26 per litre on petrol and Rs 81.90 per litre on diesel. The combined daily under-recovery being absorbed by OMCs is approximately Rs 2,400 crore. The excise reduction offsets Rs 10 per litre of these losses, ensuring OMCs can continue to supply fuel without disruption while keeping retail prices unchanged,” a statement issued by the Petroleum Ministry said.
Highlighting the impact of the West Asia conflict, Puri said global crude prices have risen sharply in recent weeks, while domestic retail prices have remained unchanged. “International crude prices have gone through the roof in the last 1 month from around 70 dollars/barrel to around 122 dollars/barrel. Consequently, petrol and diesel prices for consumers have gone up all over the world. Prices have increased by around 30-50 percent in South East Asian countries, 30 percent in North American countries, 20 percent in Europe and 50 percent in African countries,” said the minister.
“The Modi Government had two choices- either increase prices drastically for citizens of Bharat as all other nations have done or bear the brunt on its finances so that Indian citizen is insulated from international volatility. Hon’ble Prime Minister @narendramodi Ji, in keeping with his Government’s commitment of last 4 years since the conflict in Russia-Ukraine started, decided to take a hit on its own finances again to safeguard the Indian citizen,” the minister added.
According to data from the Petroleum Planning and Analysis Cell (PPAC), the Central government earned Rs 2.71 lakh crore from excise duty imposed on petroleum products in FY2024-25. The government’s revenue collection through excise duty on petroleum products grew at a Compounded Annual Growth Rate (CAGR) of 4.7 percent between 2015-16 and 2024-25.
Fuel taxes were used by the government to increase its revenue during the COVID-19 pandemic when global crude oil prices were lower. The mop-up has since moderated as the government has cut excise duty levies to ease inflation and reduce the burden on consumers.
India exported 28.027 MMT of diesel and 8.55 MMT of ATF in 2024-25. In value terms, diesel exports stood at Rs 1,61,826 crore, while ATF exports were Rs 51,267 crore. High-speed diesel (HSD) and ATF are two petroleum products which are among India’s top outbound shipments. The newly imposed export duties directly target these high-value shipments to prioritise domestic supply.
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Shutting down rumours of a lockdown, the Petroleum Minister said that adequate measures are being taken to ensure uninterrupted availability of fuel, energy and other critical supplies. “The global situation remains in flux, and we are closely monitoring developments across energy, supply chains, and essential commodities on a real-time basis. Under the leadership of Hon’ble PM @narendramodi Ji, all necessary steps are being taken to ensure uninterrupted availability of fuel, energy, and other critical supplies for our citizens. We are fully prepared to handle emerging challenges,” the minister said.
“India has consistently demonstrated resilience in the face of global uncertainties, and we will continue to act in a timely, proactive, and coordinated manner. Rumours of a lockdown in India are completely false. Let me state this clearly, there is no such proposal under consideration by the Government of India. In such times, it is important that we remain calm, responsible, and united,” he added.
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