The federal government on Monday hiked the excise responsibility on petrol and diesel by Rs 2 per litre and introduced a rise within the worth of cooking gasoline cylinders by Rs 50 with impact from Tuesday. Each these steps, in line with Petroleum Minister Hardeep Singh Puri, are geared toward offering reduction to public sector oil advertising and marketing corporations (OMCs) by compensating them for his or her collected losses on cooking gasoline gross sales. To insulate shoppers from excessive costs of liquefied petroleum gasoline (LPG, or cooking gasoline) within the worldwide market, the OMCs have been promoting LPG to households at a loss.
The hike in gas excise responsibility was notified by the Finance Ministry on Monday afternoon. Talking to reporters shortly after, Puri clarified that the burden of elevated excise responsibility is not going to be handed on to the shoppers and it’ll don’t have any influence on retail costs of the 2 fuels. The minister indicated that the extra quantity collected on account of the responsibility hike could ultimately be utilized by the federal government to cowl the OMCs’ losses on LPG gross sales. He stated that the OMCs may also hike LPG costs for households by Rs 50 from Tuesday morning, which may also assist in decreasing their under-recoveries on cooking gasoline gross sales.
Amid a steep fall in worldwide crude oil costs over the mounting commerce friction between the US and China, the federal government hiked the Particular Further Excise Responsibility (SAED) on petrol to Rs 13 per litre from Rs 11, and that on diesel to Rs 10 from Rs 8 per litre. SAED is a element within the total gas excise construction and goes fully into the Centre’s kitty, not like the Fundamental Excise Responsibility (BED) that’s shared with states. Over the previous 11 years, the federal government has hiked excise responsibility on petrol and diesel on plenty of events when worldwide oil costs noticed vital downward correction. It has additionally lower excise responsibility on the 2 fuels on just a few events to offer reduction to shoppers when world oil costs rose notably.
As for home cooking gasoline costs, a 14.2-kg cylinder will value Rs 853 from Tuesday for normal households, up from Rs 803 in Delhi, with corresponding modifications in different states. For poor households availing cooking gasoline underneath the Ujjwala scheme, the value in Delhi will go as much as Rs 553 per cylinder from Rs 503. As India relies on imports to satisfy its LPG demand, cooking gasoline costs are linked to worldwide LPG worth benchmarks.
The nation’s largest gas retailer—Indian Oil Company (IOC)—additionally posted on X that the extra mop-up because of the hike in excise responsibility “could also be” used to offer reduction to the OMCs on the LPG under-recovery entrance.
“The #ExciseDuty improve of Rs. 2 per litre on #petrol and #diesel by Central Authorities is not going to be handed on to the shoppers. On one hand, this may insulate the purchasers from the value hike whereas then again, the collected quantity could also be utilised in the direction of under-recovery of #LPG, offering reduction to Oil Advertising Corporations,” IOC stated in its submit on X.
PSU Oil Advertising Corporations have knowledgeable that there shall be no improve in retail costs of #Petrol and #Diesel, subsequent to the rise effected in Excise Responsibility Charges right this moment.#MoPNG
— Ministry of Petroleum and Pure Fuel #MoPNG (@PetroleumMin) April 7, 2025
The federal government estimates that the three OMCs—IOC, Bharat Petroleum Company (BPCL), and Hindustan Petroleum Company (HPCL)—would have incurred a cumulative lack of over Rs 41,300 crore on LPG gross sales in 2024-25 (FY25) as they’ve been promoting the family cooking gas manner under worldwide costs. Petroleum Secretary Pankaj Jain stated that he was hopeful that the OMCs shall be compensated for his or her collected losses on LPG gross sales over a 12 months or so by means of an acceptable mechanism by the federal government.
Annual petrol and diesel gross sales within the nation stand at round 16,000 crore litres, which signifies that the rise in excise responsibility ought to result in a further income of round Rs 32,000 crore for the federal government on an annualised foundation. The Petroleum Ministry and the OMCs count on this incremental income to stream again into the OMCs as authorities help. Notably, in October 2022, the federal government had authorized a one-time grant of Rs 22,000 crore for OMCs to partially cowl their collected losses of round Rs 28,000 crore on the time from promoting LPG at a loss in shopper curiosity.
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In accordance with trade insiders, the latest decline in worldwide crude oil and petroleum product costs had created sufficient headroom for the Centre to extend the levy on the 2 fuels. Alternatively, the profit may have been handed on to the shoppers within the type of a discount in retail costs of the 2 fuels.
Puri stated that the OMCs have a list cycle of round 45 days and have nonetheless not began reaping the advantages of the latest crash in oil costs, which have dropped to just a little over $60 per barrel. He added that if the worldwide crude oil costs keep across the present ranges for just a few weeks, a discount in retail costs of petrol and diesel could also be on the playing cards.
Prashant Vashisht, Senior Vice President & Co-Group Head at ICRA stated that the latest fall in oil costs imply that the OMCs’ advertising and marketing margins are anticipated to stay wholesome, however the hike in excise responsibility.
“Crude oil costs have crashed to $63-64/barrel (bbl) now from above $77/bbl as on March 31 owing to rising fears of a world recession with retaliatory tariffs being introduced by China. Moreover, the deliberate manufacturing improve by OPEC+ can be contributing to downward strain on crude costs. Additionally, the GoI introduced a rise in worth of home LPG by Rs 50/cylinder with impact from April 8, 2025. The rise within the worth of LPG would supply help to the profitability of oil advertising and marketing corporations who had been struggling huge underneath recoveries on the sale of home LPG,” Vashisht stated in a notice.
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In accordance with the Petroleum Ministry’s estimates, the common Saudi CP—the worldwide benchmark for LPG pricing—has gone up 63 per cent to $629 per tonne in February 2025 from $385 in July 2023. This could ideally translate into cooking gasoline being retailed at Rs 1,028.50 per 14.2-kg cylinder in Delhi. Nevertheless, the OMCs have been promoting cooking gasoline to households at a major loss in shopper curiosity. The Petroleum Minister indicated that cooking gasoline costs shall be reviewed each 15 days to a month and if worldwide costs calm down, the profit shall be handed on to the shoppers.