Oil Minister Hardeep Singh Puri highlighted the steep global rise in fuel prices, stating that the government chose to absorb the financial burden instead of passing it on to consumers. Experts say the move will help contain inflation and support economic stability.
However, there is no change in the retail prices of petrol and diesel. Also, there will be no reduction in the devolution pool, as the Basic Central Excise Duty remains unchanged. The government estimates a net loss of ₹5,500 crore during the first fortnight after adjusting for windfall gain. Though the government has not given estimates for the whole year, economists expect a net loss between ₹1.5 lakh crore and ₹1.7 lakh crore.
Move aimed at protecting consumers and ensuring supply
The decision to revise the duty structure was taken in a meeting called by the Prime Minister on Thursday. “The Government had two options — pass on the increase to consumers (by way of an increase in petrol and diesel prices) or take a hit (by cutting excise duty). The government chose the latter,” Finance Minister Nirmala Sitharaman said. She added that duties have been imposed on diesel exports at ₹21.5 per litre and on ATF exports at ₹29.5 per litre.
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Later, Chairman of the Central Board of Indirect Taxes & Customs, Vivek Chaturvedi, said the windfall tax on exports will result in a gain of about ₹1,500 crore in the first fortnight, while the government will have to forgo over ₹7,000 crore in revenue because of the excise duty cut. This means net loss could be ₹5,500 crore
Explaining the rationale for the levy of the export tax in the form of an SAED, he said the surge in international prices had created an incentive for refiners to export, and this move will help make available fuel for domestic consumption. He said that the export tax will be reviewed fortnightly, as was the practice previously, to align the duty with prevailing rates.
Besides, the Government has also mandated domestic refiners to supply 50 per cent of exported petrol and 30 per cent of exported diesel to the domestic market.
Madhavi Arora, Chief Economist of Emkay Global, said that such a move will help in absorbing 30-40 per cent of annualised losses of OMCs on auto fuel at current prices. “The annualised fiscal hit to the government would be ₹1.55 lakh crore owing to this burden sharing,” she said. Meanwhile, DK Pant of India Ratings & Research said that his estimates suggest that if the excise duty remains at the current level throughout FY27, it would cost the government ₹1.70 lakh crore.
Published on March 27, 2026