In a significant move to shield domestic consumers from volatile international oil prices, the Central Government has announced a substantial reduction in the Special Additional Excise Duty on petrol and diesel. According to official reports, the excise duty on petrol has been slashed from ₹13 per liter to ₹3 per liter. Similarly, the duty on diesel has been reduced from ₹10 per liter to zero. This intervention follows the escalating geopolitical tensions in the Middle East, which have threatened global energy supplies and led to fluctuations in crude oil markets.
Significant Reduction in Excise Duty
The government notification details a direct cut of ₹10 per liter in the excise duty applicable to petrol, bringing it down to ₹3 per liter from the previous ₹13. For diesel, the government has completely waived the ₹10 per liter duty, making it zero. According to officials, this measure is intended to mitigate the impact of rising global crude costs on the Indian economy and to prevent a sharp spike in retail fuel prices across the country.
Ensuring Energy Security and Supply
The conflict involving Iran, Israel, and the United States has disrupted nearly half of the raw material supply used for manufacturing fuels like petrol and diesel. Despite these disruptions, the government has assured that India has secured sufficient crude oil supplies from alternative sources for the next 60 days. This strategic reserve and diversification of sources are part of the state's efforts to maintain energy security amidst the ongoing regional instability in West Asia.
Response to Private Sector Price Hikes
The government's decision follows a recent price hike by Nayara Energy, one of India's largest private refineries. On Thursday, Nayara Energy increased petrol prices by ₹5 per liter and diesel prices by ₹3 per liter. The reduction in excise duty by the central government is seen as a corrective measure to offset these private sector increases and ensure that the general public isn't burdened by sudden surges in fuel costs.
Current Trends in Global Oil Prices
Global crude oil prices have remained elevated due to the supply chain disruptions caused by the conflict. However, early trading on Friday showed a slight softening of prices. 65 per barrel. This marginal decline is attributed to the United States' announcement of a 10-day pause on potential strikes against Iranian energy infrastructure.
Impact of the Middle East Conflict
The conflict, which intensified on February 28, has seen military actions involving the US, Israel, and Iran. Iran has targeted locations in the Gulf where US military bases are situated, leading to significant disruptions in oil exports from the region. The ongoing violence in Lebanon and Iran has resulted in thousands of casualties and has had a profound impact on global markets. As a major oil importer, India remains sensitive to these geopolitical developments, necessitating proactive fiscal measures like duty cuts.