March 27, 2026
The Indian government has slashed special additional excise duties on petrol and diesel to cushion consumers from global oil shocks linked to the US‑Israel war with Iran.
A government order reduced the extra excise on petrol to 3 rupees per litre from 13 rupees and removed the additional duty on diesel altogether, down from 10 rupees. The move is intended to limit domestic price rises after disruptions in the Strait of Hormuz and related tensions pushed international crude prices higher.
Petroleum Minister Hardeep Singh Puri said the government chose to absorb the fiscal cost rather than pass on international volatility to households, acknowledging the decision will take a significant toll on tax revenues. Officials called the measure temporary and tied to the evolving supply situation.
Analysts and Indian media cautioned that retail pump prices may not fall immediately. The tax cuts are likely to be largely absorbed by oil marketing companies, which have been selling petrol and diesel at losses as global prices surged. On Friday, pump prices in major cities were mostly unchanged.
Prime Minister Narendra Modi plans to convene a meeting with state chief ministers to review preparedness amid the ongoing Middle East crisis.
Background: Iran‑related actions around the Strait of Hormuz have disrupted oil and gas exports and driven up crude — a shock the International Energy Agency described as among the largest in history. India has also reported related supply issues, including LPG shortages and tanker delays transiting the Gulf.