India has taken a significant step to mitigate the impact of rising global energy prices on its consumers by slashing fuel taxes. The country's Petroleum Minister, Hardeep Singh Puri, revealed that the government had to choose between drastically increasing fuel prices or absorbing the financial hit to protect buyers. In response, petrol duties have been reduced from 13 rupees to 3 rupees per litre, while the duty on diesel has been completely removed. This move comes as oil prices have surged past $100 per barrel following the Iran-US-Israel conflict, which has resulted in the near-closure of the Strait of Hormuz.
India, the world's third-largest crude importer, relies heavily on the passageway for about 40% of its crude supply. However, authorities have assured that current reserves will cover 74 days, dispelling fears of a shortage. The country's resilience in the face of the energy crisis has also been underscored by Petroleum Minister Singh, who debunked rumours of an impending lockdown as "completely false". The impact of the tax cuts on ordinary consumers remains unclear, but analysts predict that oil companies selling at a loss will be the primary beneficiaries.
India's finance authorities have, however, reimposed export taxes on diesel and aviation fuel, raising them to 21.5 rupees and 29.5 rupees per litre respectively, after previously scrapping them in 2024. The country's export of refined products, including gasoline and gasoil, has been significant, with 14 million metric tonnes of gasoline and 23.6 million tonnes of gasoil being exported between April 2025 and January 2026.
India's decision to slash fuel taxes is a welcome relief for its consumers, who are already grappling with the impact of rising global energy prices. The country's resilience in the face of the energy crisis is a testament to its ability to adapt and respond to challenges. However, the reimposition of export taxes on diesel and aviation fuel raises concerns about the potential impact on the country's export sector. As India continues to navigate the complexities of the global energy market, it is clear that the country's ability to balance its economic and energy needs will be crucial to its long-term success.
