Govt slashes petrol excise to Rs 3, scraps diesel duty, Congress questions real relief

With global oil markets rattled by the escalating Middle East conflict, the Centre has announced a major cut in excise duties on petrol and diesel in an attempt to shield Indian consumers from rising crude prices. However, the opposition Congress has argued that the move offers little real relief at the fuel pump and is more about optics than actual price reduction.

In a notification issued late on Thursday, the Finance Ministry reduced the special additional excise duty on petrol from Rs 13 per litre to Rs 3 , while the levy on diesel has been completely removed from the earlier Rs 10 per litre. The decision effectively lowers the duty burden by Rs 10 per litre on both fuels and came into effect immediately.

The government estimates that the move will cost the exchequer nearly Rs 1.75 lakh crore annually.

The duty cut comes at a time when global crude oil prices have surged sharply due to the war in West Asia. Since the United States and Israel launched strikes against Iran on February 28 , crude prices have jumped nearly 50 per cent . Oil briefly touched USD 119 per barrel earlier this month before easing to around USD 100 per barrel .

India, which imports about 88 per cent of its crude oil needs, has been particularly vulnerable to the spike.

Despite the surge in global prices, state-run fuel retailers controlling nearly 90 per cent of the market have kept pump prices unchanged. Petrol in Delhi continues to cost Rs 94.77 per litre, while diesel remains at Rs 87.67 per litre. Analysts estimate that oil companies are currently incurring losses of about Rs 24 per litre on petrol and Rs 30 per litre on diesel due to the price freeze.

Finance Minister Nirmala Sitharaman said the excise cut would help protect consumers from rising global energy costs. Oil Minister Hardeep Singh Puri added that many countries have already seen fuel prices jump between 20 and 50 per cent , and the government chose to absorb part of the burden rather than pass it entirely to consumers.

To ensure domestic availability, the government has also reintroduced export duties, Rs 21.5 per litre on diesel exports and Rs 29.5 per litre on aviation turbine fuel (ATF).

However, the Congress questioned the government's claim of relief. Party spokesperson Pawan Khera said the excise reduction mainly cuts a levy paid by oil marketing companies and does not directly reduce retail fuel prices.

“If you thought petrol and diesel prices had come down, you’d be mistaken,” he said, arguing that the relief “exists only in the narrative, not in reality.”

The global energy situation remains volatile, especially around the Strait of Hormuz , through which a large share of India’s oil imports passes. For now, the government says it is closely monitoring the situation and will take further steps if necessary to ensure fuel availability and price stability.