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India has reduced its special excise duties on petrol and diesel amid volatile fuel prices caused by disruptions in supply from the ongoing US-Israel conflict with Iran.
According to a government notification on Thursday, the special excise duty on petrol has been cut from 13 rupees ($0.0318) per litre to 3 rupees, while the duty on diesel has been lowered from 10 rupees to zero.
The conflict has severely affected crude oil shipments through the Strait of Hormuz, which handles around 40% of global oil imports, creating strain on fuel and gas supplies.
The finance ministry has not specified the total cost of these duty reductions. However, economist Madhavi Arora estimates the fiscal impact could reach roughly 1.55 trillion rupees annually. She added that the cuts would offset 30%-40% of the annual losses faced by oil marketing companies on automotive fuels at current prices.
India, the world’s third-largest oil importer and consumer, relies on imports for more than 90% of its crude needs. While it has faced high crude price volatility, the country has not imposed export bans on refined fuels, unlike China.
Prime Minister Narendra Modi and his administration have assured that essential supplies, including fertilisers for the summer sowing season and coal for electricity generation, remain secure.
Last year, India consumed 33.15 million metric tons of cooking gas, with approximately 60% sourced through imports, primarily from the Middle East, accounting for around 90% of total imports.
