In a major relief for the common public, the government on Friday announced a significant reduction in excise duty on petrol and diesel. The excise duty on both fuels has been cut by ₹10 per litre. Following the decision, the excise duty on petrol has been reduced to ₹3 per litre, while the duty on diesel has been completely eliminated and brought down to zero. The move comes against the backdrop of the ongoing war involving the United States, Israel, and Iran, which has triggered a global energy crisis. The situation has worsened after Iran reportedly blocked the Strait of Hormuz, a key global oil transit route.
Notably, nearly 20% of the world’s crude oil and gas supply passes through the Strait of Hormuz, amounting to around 20 to 25 million barrels per day. Before the conflict escalated, India sourced about 12–15% of its total oil requirements through this route, making it a crucial supply corridor for the country. Estimates suggest that historically around 40–50% of India’s crude oil imports — roughly 2.2 to 2.8 million barrels per day — have passed through this route.
Impact of Excise Duty Changes
Changes in excise duty on petrol and diesel have a direct impact on consumers and the country’s economy. Excise duty is a tax levied by the central government on fuel. When excise duty increases, oil companies often pass on the additional cost to consumers, making petrol and diesel more expensive. Conversely, when the duty is reduced, fuel prices tend to fall, providing significant relief to the public.