India's Bold Move: Reducing Excise Duty Amid Global Oil Crisis

The Indian government announced a substantial reduction in excise duty on petrol and diesel, aimed at alleviating the impact of soaring global oil prices on domestic consumers. This move comes as a response to heightened tensions in the Middle East, which have driven a significant increase in oil prices, now costing the government an estimated Rs 1.75 lakh crore annually in revenue.

The excise on petrol has been slashed from Rs 13 to Rs 3 per litre, and on diesel from Rs 10 per litre to nil, according to official notifications. Alongside, an export duty of Rs 21.5 per litre on diesel and Rs 29.5 per litre on aviation turbine fuel was reinstated to ensure domestic availability, first introduced in July 2022 during the Russia-Ukraine conflict.

While domestic crude oil producers are not subject to the windfall tax, the decision comes as a relief to oil companies facing record losses due to the surge in international prices. With global crude touching $119 per barrel amid escalating Iran conflict, India's government has reiterated its commitment to shielding its citizens from volatile economic conditions.