India Lowers Fuel Taxes and Restricts Exports to Manage Supply Crisis

India has taken key steps to stabilize its fuel market by cutting domestic fuel taxes and imposing duties on exports, as the global oil crisis intensifies.

The government reduced central excise duty on petrol and diesel by ₹10 per liter each to shield consumers from rising prices. The move aims to ease the impact of soaring international crude rates on domestic users.

Export Duties Imposed to Secure Domestic Supply

To ensure adequate availability within the country, India has also introduced export duties on fuel products:

• Diesel: ₹21.50 per liter
• Aviation fuel: ₹29.50 per liter

These measures are intended to discourage exports and prioritize domestic consumption amid tightening supply.

Heavy Dependence on Middle East Adds Pressure

India, the world’s third-largest crude importer, relies on the Middle East for nearly half of its oil imports.

The ongoing crisis has severely impacted supply routes, particularly through the Strait of Hormuz, which previously handled about 90% of India’s LPG imports.

As a result, LPG shortages have emerged, leading to reduced supply for commercial and industrial users to ensure availability for households.

Government Absorbs Financial Impact

The government has acknowledged that these measures will impact its tax revenues but emphasized the need to protect consumers and support oil companies facing high losses due to elevated global prices.

Export taxes have been introduced as international fuel prices surge, ensuring that domestic supply remains stable.

Market Outlook

With global oil prices remaining elevated and supply disruptions continuing, India is expected to maintain strict measures to balance domestic availability and price stability in the near term.

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