Indian state oil firms on April 1, 2026, raised aviation turbine fuel (ATF) prices in New Delhi to a record Rs 207,341.22 per kiloliter — the first time domestic jet fuel has crossed the Rs 200,000 threshold. The jump follows severe global supply disruptions tied to the conflict involving the US, Israel and Iran and a sharp depreciation of the rupee.
Scale and context
– The new rate more than doubles previous levels and surpasses the earlier peak of about Rs 110,000 seen in 2022 after Russia’s invasion of Ukraine.
– Jet fuel prices for international routes have risen roughly 107%.
– Airlines had already begun levying fuel surcharges in March as crude prices climbed amid the Middle East crisis.
Drivers of the surge
Analysts and officials point to two main contributors:
– Supply disruptions: refined-fuel and crude supply chains from the Middle East have been severely disrupted by the conflict and tensions around the Strait of Hormuz.
– Currency depreciation: the Indian rupee recorded its weakest performance in 14 years, magnifying the domestic-cost impact of higher global fuel prices.
Government response
To blunt immediate fare shocks on domestic routes, the petroleum ministry, in consultation with the civil aviation ministry, instructed state-run oil marketing companies (OMCs) to stagger the pass-through of international price increases for domestic flights. OMCs applied a partial, staggered rise — described as 25% of the international increase, or about Rs 15 per litre — for airlines operating domestic sectors. Airlines continue to pay the full market price for international operations.
Airline and industry reactions
Major carriers welcomed the intervention. IndiGo thanked the prime minister and relevant ministries, saying the decision adds stability and helps keep domestic travel more affordable. SpiceJet also expressed gratitude and said the measure would help airlines navigate volatile fuel markets and external shocks.
Economic and political fallout
– The record jet-fuel rate raises concerns about airlines’ margins and the likelihood of higher ticket prices if surcharges are raised further.
– Opposition figures criticized the government’s handling of strategic and economic policy. Indian National Congress president Mallikarjun Kharge said the administration had mishandled policy and warned of the broader burden rising costs will place on households.
Broader sectoral effects
The fuel-price shock is rippling across multiple sectors:
– Commercial LPG prices were hiked by Rs 195.50 the same day, lifting the cost of a commercial cylinder in New Delhi to Rs 2,078.50. Commercial gas had already risen in March; domestic LPG saw a smaller earlier increase and was left unchanged on April 1.
– Petrochemical price volatility and constrained supplies are affecting manufacturers that depend on petrochemicals. Some producers, including condom manufacturers, warned of disrupted supply chains and potential price increases that could affect access to family-planning products.
Policy measures and temporary relief
To ease broader economic pressure, the government announced a one-year customs-duty relief allowing certain goods produced in Special Economic Zones (SEZs) to be sold domestically without full import taxes. The move is aimed at cushioning exporters facing higher shipping costs and tariffs. Separately, the civil aviation ministry had earlier suspended an airfare price cap to let carriers adjust fares in response to rising fuel costs; the staggered pass-through is intended to temper immediate fare shocks.
Outlook
With the Middle East conflict unresolved and currency pressures persisting, fuel-price volatility is likely to remain a major cost factor for India’s aviation sector and industries that depend on petroleum inputs. Airlines may revise surcharges in the coming days, and the government faces a difficult trade-off between preserving consumer affordability, supporting industry viability, and managing fiscal and strategic risks.