India has taken a significant fiscal hit after slashing fuel taxes to shield consumers from soaring global oil prices triggered by the ongoing Iran war. Petroleum Minister Hardeep Singh Puri said the government cut central excise duties by ₹10 per litre on both petrol and diesel to prevent a spike in pump prices, as reported by CNBC.
According to Puri, crude prices have surged from about $70 to $122 per barrel in a month. The government has chosen to absorb the rising costs, reducing the burden on consumers and oil companies, which were facing losses of ₹24 per litre on petrol and ₹30 on diesel.
India takes a ‘huge hit’ on tax revenue to keep fuel prices from surging during the Iran war https://t.co/DJ9rk5fbfQ
— CNBC (@CNBC) March 27, 2026
Official data shows excise duty on petrol has been cut to ₹3 per litre, while diesel duty has been reduced to zero.
Finance Minister Nirmala Sitharaman said higher export duties on diesel and aviation fuel aim to ensure adequate domestic supply.
Economists warn prolonged high oil prices could strain India’s fiscal deficit and slow growth. Business activity has already weakened, with HSBC data showing March activity at its lowest since October 2022.
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TIPP Staff
