India cuts special excise duties on petrol, diesel

India has reduced its special excise duties on petrol and diesel as fuel prices remain unstable due to supply issues caused by the Iran war. On Thursday, the finance ministry announced a decrease in the special excise duty on petrol to 3 rupees ($0.0318) per litre, down from 13 rupees. The duty on diesel was cut to zero, previously set at 10 rupees. The ongoing conflict between the U.S. and Israel with Iran has nearly shut down the Strait of Hormuz, a critical route for 40% of crude oil imports, affecting shipping and gas supplies. The ministry did not disclose the financial impact of these duty reductions on the government. Madhavi Arora, an economist from Emkay Global, estimates the annual loss could reach about 1.55 trillion rupees. She noted that these cuts would cover around 30%-40% of the yearly losses faced by oil marketing companies for auto fuel at current prices. India has faced significant challenges due to fluctuating crude prices and interruptions in oil and gas supplies, but unlike China, it has not imposed a ban on the export of refined fuels. Prime Minister Narendra Modi and his administration have assured that sufficient arrangements are in place for essential supplies, including fertilizers for the upcoming summer planting season and coal to meet increasing electricity demand. As the third-largest oil importer and consumer globally, India relies on imports for over 90% of its oil needs. Last year, the South Asian nation used 33.15 million metric tons of cooking gas, with imports making up about 60% of that demand, mainly sourced from the Middle East.