Government sources have said India has reduced fuel prices four times over the last four years through a series of excise duty cuts and policy interventions aimed at cushioning domestic consumers from global crude oil volatility. According to official inputs, the most significant reduction came on March 27 this year, when the Special Additional Excise Duty (SAED) was cut by ₹10 per litre, effectively reducing the excise duty on diesel to near zero. Authorities said these steps were intended to stabilise retail fuel prices during periods of sharp global oil price fluctuations.

Sources stated that between 2021 and 2026, the Centre implemented four major rounds of excise duty reductions. These include cuts in November 2021, when petrol prices were reduced by ₹5 per litre and diesel by ₹10; May 2022, when petrol fell by ₹8 and diesel by ₹6; followed by additional reductions in March 2024 and April 2025. These measures were taken amid major disruptions in global energy markets following the Russia–Ukraine conflict.

Officials said India’s approach differed from many other countries, which largely passed rising crude oil costs directly to consumers. Instead, India pursued a policy of price stability by combining excise duty cuts, absorption of losses by public sector oil marketing companies, and adjustments in export duties to maintain domestic supply balance.

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The report also highlighted the role of legacy “oil bonds,” stating that liabilities worth around ₹1.34 lakh crore issued between 2005 and 2010 had to be redeemed by the current government. It further noted that tax reductions in recent years, including in March 2026, resulted in an estimated fiscal burden of nearly ₹30,000 crore for the government.

Sources added that public sector oil companies faced significant financial strain during periods of high global crude prices, including losses of about ₹24,500 crore between 2021 and 2024. They also pointed to additional pressures arising from subsidised LPG pricing and global supply disruptions, even as domestic retail prices remained comparatively stable against sharper increases seen in several other countries.

Officials further explained that variations in fuel prices across Indian states are primarily driven by differing Value Added Tax (VAT) rates. While the Centre levies a uniform excise duty, state taxes vary widely, leading to higher prices in some regions such as Andhra Pradesh, Telangana, and Kerala, compared to states with lower VAT rates like Gujarat, Uttar Pradesh, Delhi, Haryana, Goa, and Assam.

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