Published: 26 March 2026Business StandardEconomy
Centre Slashes Excise Duty on Petrol and Diesel by ₹10 Per Litre Amid West Asia Crisis
In a major move to cushion the impact of surging global crude oil prices, the Central Government on March 27, 2026, announced a reduction in special additional excise duty on petrol and diesel by ₹10 per litre each. The excise duty on petrol has been reduced from ₹13 per litre to ₹3 per litre, while the duty on diesel has been slashed from ₹10 per litre to zero.
The decision comes against the backdrop of the ongoing West Asia conflict involving the US, Israel, and Iran, which has led to a near-50% spike in crude oil prices this month. The blockade of the Strait of Hormuz has severely disrupted global energy supply chains.
However, the reduction is unlikely to translate into immediate price relief for consumers at fuel pumps, as oil marketing companies (OMCs) are expected to absorb the cut to offset heavy losses on pump sales. The move is estimated to lead to a revenue loss of approximately ₹1.75 lakh crore for the exchequer. Consumers will still pay an effective excise of ₹11.9 per litre on petrol and ₹7.80 per litre on diesel due to other existing duties and cess.
0Mains angle
Q: Examine the fiscal and energy-security rationale behind the Central Government's decision on 27 March 2026 to cut special additional excise duty on petrol and diesel by ₹10 per litre amid the ongoing West Asia crisis.
Answer (50 words):
On 27 March 2026, the Centre slashed special additional excise duty by ₹10 per litre, reducing petrol duty from ₹13 to ₹3 and diesel duty from ₹10 to zero. Triggered by the West Asia conflict and Strait of Hormuz blockade, it entails ₹1.75 lakh crore revenue loss.
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Practice MCQ from this story
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Linked questionMedium
By how much did the Central Government reduce the special additional excise duty on petrol and diesel per litre on March 27, 2026?
Explanation · Correct answer CThe Central Government reduced the special additional excise duty on both petrol and diesel by ₹10 per litre on March 27, 2026, amid the West Asia crisis and surging crude oil prices.
Frequently asked questions
How much was the excise duty cut on petrol and diesel announced by the Central Government on March 27, 2026?
The Central Government reduced special additional excise duty on **petrol** by **₹10 per litre** (from ₹13 to **₹3 per litre**) and on **diesel** by **₹10 per litre** (from ₹10 to **zero**) on March 27, 2026, in response to the West Asia conflict.
What is the revenue loss to the exchequer from the excise duty cut on petrol and diesel in March 2026?
The excise duty cut is estimated to cause a revenue loss of approximately **₹1.75 lakh crore** for the exchequer. Despite the cut, consumers will still pay an effective excise of **₹11.9 per litre on petrol** and **₹7.80 per litre on diesel** due to other existing duties and cess.
Will fuel pump prices fall immediately after the ₹10 per litre excise duty cut in March 2026?
**No immediate price relief** is expected at fuel pumps because **Oil Marketing Companies (OMCs)** are expected to absorb the excise duty cut to offset their heavy losses from selling fuel below cost. The benefit is primarily to reduce OMC losses rather than directly lower retail prices.
Why did India cut petrol and diesel excise duty in March 2026 — what role did the West Asia conflict play?
The West Asia conflict involving **US, Israel, and Iran** caused a near-**50% spike in crude oil prices** in March 2026 and the **blockade of the Strait of Hormuz** severely disrupted global energy supply chains. India's excise duty cut was a proactive measure to partially offset these surging import costs.
What is the effective excise duty on petrol and diesel in India after the March 2026 cut?
After the ₹10 per litre cut, the special additional excise duty on **petrol** dropped from ₹13 to **₹3 per litre**, and on **diesel** from ₹10 to **zero**. However, consumers still pay an effective excise of **₹11.9 per litre on petrol** and **₹7.80 per litre on diesel** owing to other levies and cess still in force.
