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India will not raise retail petrol and diesel prices despite tax increases

Oil Minister Hardeep Singh Puri announced that India raised the excise tax on petrol and diesel on Monday without passing higher costs on to consumers. This would increase government tax collections amid falling oil prices worldwide.

Puri, at a recent press conference, said that the increase in excise taxes would be absorbed and not passed on to consumers.

He said that higher tax collections from state-owned fuel retailers and private fuel retailers could help New Delhi partially compensate state companies who suffered a revenue loss in 2024/25 of 413.80 trillion rupees (4.8 billion dollars) on sales of local cooking gas below market prices.

From April 8, the government increased the excise tax on a litre each of petrol and diesel, bringing the effective tax up to 13 and 10 rupees.

Oil secretary Pankaj Jain stated that Indian refiners sell 160 billion litres per year of petrol and diesel. This means the government will earn at least 320 million rupees.

The global oil price fell by nearly 4% Monday, as escalating tensions in trade between the United States (US) and China stoked concerns about a possible recession which would lower demand for crude. Meanwhile, OPEC+ is preparing to increase supply.

Brent and WTI benchmarks have both fallen to their lowest levels since April 2021.

Puri said that, if the global oil price remains at the current level, "we'll have enough headroom to lower the prices of gasoline and diesel".

India also increased the retail price of a 14,2 kilogram cooking gas container by 50 rupees.

Jain said that the latest rise in the price of cooking gas will help companies recover current revenue losses. The oil ministry will also seek assistance from the finance department to offset the dues for last year.

The state refiners, including Indian Oil Corp., Hindustan Petroleum Corp., and Bharat Petroleum (which own 66% and 90% respectively of India's 5,14 million barrels of refining capacity per day and 95,000 retail fuel outlets) have announced that they will not increase the prices of petrol or diesel.

Reliance Industries Ltd. and Nayara Energy, private refiners, hold the rest.

Prashant Vashisth is senior vice-president at rating agency ICRA. He said that despite the increase in excise duties, oil marketing companies' marketing margins are expected to be healthy due to the recent significant drop in crude oil prices.

(source: Reuters)