Page 48 - Policy Economic Report - March 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

d. Cleaner Environment: Increased adoption of natural gas for cooking, transport as well as
industrial purposes will contribute to improved air quality and lower emissions.

e. Economic Growth: Reliable and affordable energy supply will support industrial and commercial
activity.

Government’s Commitment

The Government remains committed to expanding the role of natural gas in India’s energy mix and
fostering a policy environment that promotes investment, innovation, and sustainability.

This Order marks an important step towards building a gas-based economy, supported by efficient
infrastructure, ease of doing business, and wider access to clean energy.

Government Slashes Excise Duty on Petrol and Diesel to Shield Consumers and OMCs from Global Oil
Shock

The Government of India has reduced excise duty by Rs 10 per litre on both petrol and diesel with
immediate effect. This decision has been taken in response to the steep and rapid rise in international
crude oil prices, which have surged from approximately USD 70 per barrel to around USD 122 per barrel
over the past month — an increase of nearly 75 per cent in under four weeks, driven by the ongoing
conflict in West Asia and associated disruptions to global energy supply chains.

Retail pump prices of petrol and diesel will not change. The excise reduction is not being passed on as a
price cut at the pump. Instead, it directly reduces the under-recoveries being absorbed by public sector
oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum Corporation and
Hindustan Petroleum Corporation — who have continued to supply fuel to Indian consumers at prices
well below their cost of supply. At current international crude prices, under-recoveries stand at
approximately Rs 26 per litre on petrol and Rs 81.90 per litre on diesel. The combined daily under-
recovery being absorbed by OMCs is approximately Rs 2,400 crore. The excise reduction offsets Rs 10
per litre of these losses, ensuring OMCs can continue to supply fuel without disruption while keeping
retail prices unchanged.

The contrast with global fuel markets is instructive. Fuel prices have risen by 30 to 50 per cent across
South and South-East Asian countries, 30 per cent in North America, and 20 per cent in Europe since the
onset of the current crisis. India has held the line. That stability carries a fiscal cost, and the Government
has chosen to bear it.

The Minister for Petroleum and Natural Gas, Shri Hardeep Singh Puri, stated:

“The Government had two choices: either increase prices drastically for citizens of Bharat as all other
nations have done, or bear the brunt on its finances so that the Indian citizen is insulated from
international volatility. Honourable Prime Minister Shri Narendra Modi Ji decided to take a hit on
Government finances to safeguard the Indian citizen. The Government has taken a substantial impact on
its taxation revenues to reduce the high losses being faced by oil marketing companies at this time of
sky-high international prices.”

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