Excise on petrol, diesel cut by ₹10/litre to help oil firms; no change in prices for consumers

The Union government on Thursday reduced the Special Additional Excise Duty (SAED) on petrol and diesel by ₹10 per litre each, effectively bringong the duty on diesel to zero and on petrol to ₹3/litre. The move will not, however, translate into lower fuel prices for consumers.

Instead, the government said the duty cut — implemented through a notification by the Ministry of Finance — was aimed at reducing the fiscal hit that oil marketing companies are absorbing due to high and rising oil prices.

Significant fiscal impact

In response to a question from The Hindu at an inter-ministerial press briefing, Chairman of the Central Board of Indirect Taxes and Customs (CBIC) Vivek Chaturvedi said that the reduction in excise duty is expected to cost the exchequer ₹7,000 crore over the next fifteen days.

“The excise reduction is not being passed on as a price cut at the pump,” the Ministry of Petroleum and Natural Gas said in a statement issued following the notification. “Instead, it directly reduces the under-recoveries being absorbed by public sector oil marketing companies (OMCs) — IOCL, BPCL, HPCL — who have continued to supply fuel to Indian consumers at prices well below their cost of supply.”

At the same time, the government hiked the export duties on diesel to ₹21.5 per litre, and on ATF to ₹29.5 per litre. Mr. Chaturvedi said the government expects to add ₹1,500 crore to the exchequer through these hikes, which would mitigate some of the impact of the excise duty cuts on domestic petrol and diesel. The net charge on Central revenues from all the changes will be ₹5,500 crore over 15 days, he added.

Unpredictable situation

The CBIC will review these rates on a fortnightly basis, based on import trends and observed revenue implications.

“The situation is dynamic; it is not business as usual where there is a certain predictability,” Mr. Chaturvedi said. “Any implication on that [revenues] will have to factor in the actual supplies of goods coming into the country. Even within a limited period of fortnight, the department will also have to look at supplies before coming up with a realistic implication as far the revenue is concerned.”

The West Asian conflict’s impact on the seaborne energy trade had pushed Brent crude futures to more than $111 per barrel on Friday evening.

‘No lockdown planned’

Union Petroleum Minister Hardeep Singh Puri shut down rumours about a potential lockdown due to the fuel crisis as “completely false”. In a social media post, he said: “Let me state this clearly, there is no such proposal under consideration by the Government of India,” he wrote.

He noted that the government has taken a huge hit on taxation revenues through the excise duty reduction. There is little clarity, however, on the quantum of losses faced by state-run OMCs. According to Mr. Puri, at the current international prices of crude, OMC losses stand at approximately ₹24 per litre for petrol and ₹30 a litre for diesel.

According to his Ministry’s statement later in the day, however, OMCs face under recoveries of about ₹26 for every litre of petrol and ₹81.90 per litre of diesel, adding that this works out to about ₹2,400 crore of under recoveries being absorbed by the OMCs every day.

Private OMCs start passing the buck

While public sector OMCs are currently holding fuel prices level despite the spiralling global prices, some private firms are beginning to pass on their higher input costs to consumers.

On Thursday (March 26, 2026), privately-owned refiner Nayara Energy increased petrol prices by ₹3 per litre, and by ₹5 per litre of diesel, citing the “unprecedented challenges in the industry, impacting several aspects of fuel disruption and availability”.