By Nidhi Verma
NEW DELHI (Reuters) -India on Monday raised excise duty on petrol and diesel without passing on higher costs to consumers, oil minister Hardeep Singh Puri said, a move that would boost the government’s tax collection amid falling global oil prices.
The hike in excise tax would be absorbed by state-controlled fuel retailers and will not be passed on to consumers, Puri said at a press conference.
Higher tax collection from the state-owned and the private fuel retailers would help New Delhi partly compensate state companies that incurred a revenue loss of 413.80 billion rupees ($4.83 billion) in 2024/25 on local sales of cooking gas at below market rates, he said.
The government has raised the excise duty on a litre of petrol and diesel by 2 rupees each from April 8, taking the effective tax to 13 rupees and 10 rupees, respectively.
Indian refiners annually sell 160 billion litres of petrol and diesel, oil secretary Pankaj Jain said, indicating that the government will raise at least 320 billion rupees.
Global oil prices fell nearly 4% on Monday as escalating trade tensions between the United States and China stoked fears of a recession that would reduce demand for crude while OPEC+ readies a supply increase.
The Brent and WTI benchmarks both dropped to their lowest since April 2021.
Puri also said that if global oil prices remain at current level “we will have the headroom to bring down the prices of petrol and diesel”.
India has also raised the retail prices of a 14.2 kilogram cooking gas cylinder by 50 rupees.
The latest increase in cooking gas prices will help the companies in recovering current revenue losses and the oil ministry will seek help from the finance ministry for offset of the last year’s dues, said Jain.
State refiners including Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum, which own 66% of India’s 5.14 million barrels per day refining capacity and 90% of about 95,000 retail fuel stations, have announced they would not raise the pump prices of petrol and diesel.
Private refiners including Reliance Industries Ltd and Nayara Energy hold the remainder.
“Owing to the significant decline in crude oil prices recently, the marketing margins of oil marketing companies are expected to remain healthy despite the excise duty increase,” said Prashant Vashisth, senior vice-president of rating agency ICRA.
(Reporting by Nidhi Verma, Editing by David Evans)
