Fuel price review every 15 days, excise duty reduced to shield consumers from global crude shock

The government will review petrol and diesel prices every 15 days as part of a closely monitored response to the sharp rise in global crude oil prices triggered by the ongoing West Asia conflict, a senior official said on Friday. The move indicates that fuel pricing decisions will remain flexible in the coming weeks as geopolitical tensions continue to keep global energy markets volatile.

Speaking at an inter-ministerial briefing, CBIC Chairman Vivek Chaturvedi said the current situation cannot be treated as business as usual, as disruptions in shipping routes, supply chains, and crude availability have pushed international oil prices sharply higher. He said the government is adopting a calibrated approach to balance consumer interest, fiscal impact, and the financial health of oil marketing companies.

Fortnightly review

According to officials, the government will assess the fuel pricing situation every fortnight, taking into account import costs, domestic consumption trends, and international crude price movements before deciding on any further changes in duties or retail prices.

The review mechanism has been introduced to ensure quicker policy responses if crude prices rise further or supply conditions worsen. Authorities said such periodic assessment will help avoid sudden price shocks for consumers while maintaining stability in fuel supply across the country.

Officials noted that the recent cut of ₹10 per litre in excise duty on petrol and diesel has already resulted in a revenue loss of around ₹7,000 crore in just two weeks, highlighting the financial cost of keeping retail prices under control.

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Excise duty cut

The government recently reduced excise duty on petrol and diesel by ₹10 per litre to prevent an increase in pump prices despite crude oil crossing $100 per barrel. The special additional excise duty on petrol was reduced from ₹13 per litre to ₹3, while the duty on diesel was cut from ₹10 per litre to zero.

Despite the reduction, retail fuel prices have not been lowered, as the tax relief is being used to offset under-recoveries faced by public sector oil marketing companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, which have been absorbing the impact of rising crude prices.

The duty cut is estimated to have an annual revenue impact of nearly ₹1.75 lakh crore based on current fuel consumption levels, underlining the fiscal pressure created by the surge in global oil prices.

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Export duty

Alongside the excise revision, the government has reintroduced export duties on diesel and aviation turbine fuel (ATF) to ensure adequate domestic availability. Export duty has been fixed at ₹21.5 per litre on diesel and ₹29.5 per litre on ATF, a step aimed at discouraging excessive exports when global prices are elevated.

Officials said crude prices have risen nearly 50% in recent weeks due to supply disruptions linked to the West Asia conflict, increasing the financial burden on oil companies. Instead of allowing a sharp rise in retail prices, the government has chosen to absorb part of the impact through tax adjustments while closely monitoring the situation.

No fuel shortage

Authorities also reassured consumers that there is no shortage of petrol or diesel in the country. India has adequate crude inventories and sufficient supplies of LPG, LNG, and refined fuels, even as global energy markets remain uncertain.

Officials said the fortnightly review system will allow the government to respond quickly to changing conditions, maintain supply stability, and prevent sudden spikes in retail fuel prices.