Union Petroleum Minister Hardeep Singh Puri on Friday explained the rationale behind the Indian government reducing special excise duty on petrol and diesel amid the raging conflict in West Asia.
According to the Union Minister, the Narendra Modi government had only two options: either increase fuel prices or bear the financial burden until Indian citizens are isolated. Follow live coverage of the impact of the conflict in West Asia here.
“Global crude oil prices have risen over the past month, from about $70 per barrel to about $122 per barrel. As a result, petrol and diesel prices have risen for consumers across the world. Prices have risen by about 30%-50% in Southeast Asian countries, 30% in North American countries, 20% in Europe, and 50% in African countries. The Modi government had two options – either increase prices significantly for the citizens of Bharat.” As all other countries have done or taken the brunt on their finances, such that the Indian citizen is insulated from international fluctuations,” Puri explained in a post on X.
“Prime Minister @Narendramji Ji, in line with his government’s commitment over the past four years since the start of the conflict in Russia and Ukraine, has decided to once again strike at its finances to protect the Indian citizen,” he added.
Puri said the government has taken a huge hit to its tax revenues to ensure that oil companies’ very high losses (about Rs 24 per liter of petrol and Rs 30 per liter of diesel) are reduced amid rising global prices.
“At the same time, the export tax has been imposed as the global prices of petrol and diesel have skyrocketed, and any refinery exporting to foreign countries will have to pay the export tax. I express my gratitude to Hon’ble Prime Minister Narendra Modi Ji and Hon’ble Foreign Minister @nsitharaman Ji for this bold and very timely and insightful decision!” he wrote.
Decision to reduce taxes
Hardeep Puri’s explanation comes after the Indian government reduced the Special Additional Excise Duty (SAED) on petrol and diesel, in a move apparently aimed at reducing oil companies’ losses.
Today, Thursday, the Ministry of Finance decided to reduce special customs duties on gasoline to $3 per liter of $13 earlier. Customs duties on diesel were also reduced to zero $10.
This notification comes amid supply disruptions due to the ongoing US-Iranian war. “…the Central Government, being satisfied that it is necessary in the public interest to do so…”, part of the order read.
The changes have been notified through amendments to the Central Excise Rules and Duty Structures, which will “come into effect with immediate effect,” according to the Gazette notification. It is unlikely to have any immediate impact on pump prices.
Regarding Aviation Turbine Fuel (ATF), the order states: “Aviation turbine fuel Rs 50 per litre” as special excise surcharge, besides exemptions capping the effective rate at “Rs 29.5 per litre” in some cases.
