Why India Reduced Petrol, Diesel Excise Duty While Oil Prices Soared ?

March 27, 2026

New Delhi: Union Petroleum Minister Hardeep Singh Puri on Friday explained why the Indian government reduced the special excise duty on petrol and diesel. He said the Narendra Modi government had two options: either increase fuel prices due to rising global crude oil prices, as other countries have done, or protect Indian citizens by bearing the financial burden.

Puri said on X, “International crude oil prices have risen from approximately $70 per barrel to $122 per barrel in the past month. This has led to a sharp increase in petrol and diesel prices across the world—30-50% in Southeast Asia, 30% in North America, 20% in Europe, and 50% in Africa.” He emphasized that the government has decided to bear the financial burden so that ordinary Indians do not face additional pressure.

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…

— Hardeep Singh Puri (@HardeepSPuri) March 27, 2026

Impact on Government Finances and Oil Companies

The minister explained that this move has had a significant impact on the government’s tax revenues, in order to mitigate oil companies’ losses. Due to international prices, oil companies’ estimated losses were ₹24 per liter for petrol and ₹30 per liter for diesel.

To balance the situation, taxes have been imposed on foreign exports to ensure domestic supply remains a priority. Puri thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for taking this “timely, bold, and visionary” decision.

Details of the excise duty cut

As per the government’s decision, the Finance Ministry reduced the Special Additional Excise Duty (SAED) on petrol from ₹13 per liter to ₹3 and on diesel from ₹10 to zero. This order was issued in the public interest and implemented with immediate effect through an amendment to the Central Excise Rules and Framework.

The notification also includes changes for Aviation Turbine Fuel (ATF), where the Special Excise Duty has been fixed at ₹50 per liter, while after exemptions in certain cases, it is capped at ₹29.5 per liter.

Background: West Asia Conflict and Supply Insecurity

This excise duty cut comes amid supply instability due to US-Iran tensions. The move aims to protect citizens from international price fluctuations, although its impact on petrol pump prices will not be immediately visible as oil companies adjust to the new tariffs and global market conditions.