New Delhi: In a move that will help keep fuel prices in check, the government, on Friday, cut excise duty on petrol and diesel by Rs 10 per litre. The excise duty on petrol will now be Rs 3 per litre, while it will be nil on diesel.
While this doesn’t mean that fuel prices will drop, it will ensure they do not go up.
This comes at a time of a deepening global energy crisis triggered by the ongoing West Asia, with Iran continuing to restrict movement through the Strait of Hormuz – a critical route that carries nearly a fifth of the world’s crude oil and gas supplies, estimated at 20-25 million barrels per day.
India sourced roughly 12-15% of its crude imports through this vital corridor before the conflict, as reported by News18.
With crude prices rising, this reduction in excise duty will ease cost pressures on oil marketing companies (OMCs), cushioning the impact to a large extent.
To balance this cut, the government has introduced a special additional excise duty of Rs 50 per litre on aviation turbine fuel. The effective duty is estimated to be significantly lower, at around Rs 29.5 per litre due to exemptions and adjustments though.
Rules regarding fuel exports have also been tightened with the government withdrawing broad-based excise exemptions that were previously available on shipments of petrol, diesel and ATF.
Export-related benefits will now be limited to specific and clearly defined categories, indicating a more calibrated and restrictive policy stance.
However, supplies made by public sector oil companies to neighbouring countries such as Nepal, Bhutan, Bangladesh and Sri Lanka will continue to enjoy preferential treatment.
Officials have also said that previously approved export consignments will not be affected retrospectively, providing relief to companies with existing commitments.
Through these moves, the government wants to prioritise fuel price stability and keep inflation in check.
