Govt Cuts Petrol Excise Duty to Rs 3, Diesel Exempted Amid Iran Tensions

NEW DELHI, Mar 27: The government has reduced excise duty on petrol to Rs 3 per litre and exempted diesel from the levy to shield consumers from rising global crude prices amid the ongoing Middle East conflict.

Global crude rates have surged nearly 50% since February 28, when the United States and Israel launched military strikes against Iran, prompting retaliatory actions from Tehran.

In a notification issued on March 26, the Finance Ministry said the petrol excise duty has been cut from Rs 13 to Rs 3 per litre, while the diesel levy has been reduced from Rs 10 to nil. The cuts are effective immediately.

Retail pump prices have remained unchanged despite the international price spike, straining oil companies’ finances. To ease this, the government lowered excise duties on petrol and diesel. Following the notification, shares of IOC, BPCL, and HPCL opened higher on the BSE.

Rating agency ICRA had earlier noted that if crude prices hit USD 100-105 per barrel, fuel retailers could incur losses of Rs 11 per litre on petrol and Rs 14 per litre on diesel. It also suggested that excise duty cuts could help companies offset refining losses while maintaining retail prices.

International oil rates touched USD 119 per barrel earlier this month due to the Iran conflict before stabilizing near USD 100. India imports 88% of crude and about half its natural gas, mostly via the Strait of Hormuz, where tanker movements were disrupted following Iranian warnings and insurer withdrawals.

Nayara Energy, operating 6,967 petrol pumps, raised petrol prices by Rs 5 per litre and diesel by Rs 3. Petrol at its outlets now costs Rs 100.71 per litre and diesel Rs 91.31. Jio-bp, with 2,185 outlets, has not raised rates despite losses, while state-owned retailers, controlling 90% of the market, continue to keep petrol at Rs 94.77 and diesel at Rs 87.67 per litre in Delhi. (Agencies)