Centre Cuts Excise Duty on Petrol, Diesel by ₹10 but Prices May Not Fall Immediately

The government has reduced excise duty on petrol and diesel by ₹10 per litre, but retail prices are unlikely to drop soon as oil companies use the relief to offset rising global crude costs.

March 28, 2026 | New Delhi In a significant move aimed at cushioning the impact of rising global oil prices, the Central government has slashed excise duty on petrol and diesel by ₹10 per litre. While the decision has raised expectations of immediate relief for consumers, experts suggest that fuel prices at the pump may remain unchanged in the short term. The excise duty on petrol has been reduced sharply to ₹3 per litre, while diesel duty has been brought down to zero. However, despite this substantial cut, retail fuel prices are unlikely to see an immediate decline due to broader market dynamics and financial pressures on oil marketing companies.

Officials indicated that the primary objective of the duty reduction is not to directly lower consumer prices but to ease the financial burden on state-run oil companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. These firms have been absorbing significant losses due to the surge in international crude oil prices. Global crude prices have risen sharply in recent weeks amid geopolitical tensions, putting pressure on domestic fuel retailers. As a result, oil companies have been selling petrol and diesel below cost, leading to substantial under-recoveries. The excise duty cut helps offset part of these losses, enabling companies to maintain stable retail prices rather than increase them.

Analysts note that instead of passing on the tax benefit to consumers, companies may use the relief to stabilize margins and recover earlier losses. This means that while the government has reduced its tax component, the immediate impact on consumers will be limited. The move also reflects the government’s broader strategy to shield consumers from volatile global energy markets while ensuring uninterrupted fuel supply. However, experts warn that sustained high crude prices could continue to influence domestic fuel pricing in the coming weeks.

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