Petrol and diesel prices in India are poised to rise following the central government’s decision to hike the excise duty on both fuels by Rs 2 per litre. The announcement, which comes into effect on April 8, 2025, has drawn mixed reactions from economists, consumers, and political analysts, especially given that global crude oil prices are currently on a downward trajectory.
The hike comes at a delicate time, as the international energy market is already grappling with volatility stemming from global trade uncertainties. Crude oil prices have dipped in recent weeks, largely driven by growing fears of a global trade war triggered by the US administration’s retaliatory tariffs, especially under the policies pursued by President Donald Trump. The ripple effect of these tariffs is being felt across commodity markets worldwide, including oil.
Despite the fall in crude oil prices globally, Indian consumers are unlikely to benefit immediately due to the increased taxation. Many view the move as a revenue-boosting measure by the government, potentially aimed at shoring up public finances in the face of rising welfare spending and infrastructure investments. However, critics argue that such fiscal strategies may backfire by increasing inflationary pressure on ordinary households.
Higher excise duties directly affect the price at which petrol and diesel are sold, and with fuel being a core input across industries—including transportation, logistics, agriculture, and manufacturing—there are fears that this could trigger a cascading effect on overall commodity prices. This, in turn, could strain already stretched household budgets, especially in urban and lower-income segments where transportation costs make up a significant portion of monthly expenses.
Responding to public concern, the Ministry of Petroleum and Natural Gas clarified that Public Sector Undertaking (PSU) Oil Marketing Companies (OMCs) have been instructed to absorb the excise duty increase, at least temporarily. “PSU Oil Marketing Companies have informed that there will be no increase in retail prices of petrol and diesel, subsequent to the increase effected in Excise Duty Rates today,” the ministry said in an official statement. This suggests that companies like Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum may bear the financial burden in the short term to prevent immediate price hikes for consumers.
This is not the first time the government has recalibrated its approach to fuel pricing. In December 2024, it had removed the windfall profit tax on domestically produced crude oil and on fuel exports, citing falling global crude prices. That move was seen as a step to ease the burden on domestic oil producers and to align export competitiveness.
As of April 7, 2025, petrol prices across major metros are as follows:
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New Delhi: Rs 94.77 per litre
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Mumbai: Rs 103.50 per litre
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Chennai: Rs 100.80 per litre
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Kolkata: Rs 105.01 per litre
Diesel prices stand at:
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New Delhi: Rs 87.67 per litre
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Mumbai: Rs 90.03 per litre
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Chennai: Rs 92.39 per litre
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Kolkata: Rs 91.82 per litre
These prices reflect the government's ongoing balancing act—managing revenue generation while attempting to shield the public from global shocks and inflation. However, economists warn that if oil companies are unable to continue absorbing costs in the long term, price increases may become inevitable, further amplifying the financial burden on consumers and small businesses.
With general elections on the horizon and inflation already a key political issue, how this decision plays out in the coming weeks could significantly shape the public mood—and possibly the policy narrative—in the months ahead.
