Duty reduction aims to ease pressure on oil companies as crude prices surge above $100 due to Gulf tensions and supply disruptions
The Government of India has reduced the Special Additional Excise Duty (SAED) on petrol and diesel amid global oil market disruptions triggered by the ongoing conflict between the United States and Iran.
According to a government notification issued on Thursday, the Finance Ministry reduced the special excise duty on petrol to ₹3 per litre from ₹13 earlier, while the duty on diesel has been cut to zero from ₹10 per litre.
The decision comes at a time when global energy markets are facing volatility due to the war in West Asia, which has pushed crude oil prices above $100 per barrel and disrupted key supply routes.
The government order stated that the changes were introduced in public interest. “…the Central Government, being satisfied that it is necessary in the public interest so to do…,” the notification said.
The revisions were notified through amendments to Central Excise duty rules, and the changes have come into effect immediately following publication in the Gazette notification.
No immediate impact on retail prices
Despite the duty cut, officials indicated that there is unlikely to be an immediate impact on petrol and diesel prices at the pump.
The move is largely seen as an attempt to reduce financial pressure on oil marketing companies that are facing rising crude import costs.
ATF duty structure
The government order also addressed taxation on Aviation Turbine Fuel (ATF).
The notification stated:
“Aviation Turbine Fuel – ₹50 per litre” as the special additional excise duty.
However, certain exemptions cap the effective duty rate at ₹29.5 per litre in specific cases.
Impact of the US-Iran war on global oil markets
The excise duty revision comes amid escalating tensions in the oil-rich Gulf region following US-Israeli strikes on Iran, which have disrupted oil supplies and shipping routes.
One of the most critical chokepoints affected is the Strait of Hormuz, a narrow waterway through which nearly 20% of the world’s oil and gas supply passes.
Any disruption to this route has a direct impact on global energy markets.
India’s energy vulnerability
India imports over 80% of its crude oil requirements, making it highly sensitive to global price fluctuations.
As crude prices rise due to geopolitical tensions, governments often adjust taxes and excise duties to stabilize domestic fuel prices and control inflation.
The latest SAED reduction is aimed at cushioning the economy from the impact of surging crude prices while preventing a sudden spike in retail fuel costs for consumers.
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