How prices of petrol & diesel are determined?
India imports 88 per cent of its crude oil needs and roughly half of its natural gas requirement.
India imports 88 per cent of its crude oil needs and roughly half of its natural gas requirement.
India imports 88 per cent of its crude oil needs and roughly half of its natural gas requirement.
• The government has reduced excise duty on petrol to Rs 3 per litre and exempted diesel fully from it to help oil marketing companies deal with the rising global crude prices amid the war in the Middle East.
• In a notification issued by the Ministry of Finance, the excise duty on petrol was cut from Rs 13 to Rs 3 per litre, while the levy on diesel has been slashed to nil from Rs 10 earlier.
• Fuel marketing companies in India have been under strain as retail petrol and diesel prices remained frozen despite a nearly 50 per cent surge in international oil prices since February 28, when the United States and Israel launched military strikes against Iran, triggering sweeping retaliation from Tehran.
• India imports 88 per cent of its crude oil needs and roughly half of its natural gas requirement. These mostly come via the Strait of Hormuz.
• As conflict intensified, Iran blocked the strait, and insurers withdrew coverage, effectively halting tanker movements.
• Meanwhile, the Ministry of Petroleum & Natural Gas has said that India has about 60 days of oil stock cover and has arranged one full month of LPG supply.
• It assured that there is no shortage of petrol, diesel, or LPG, calling reports of shortages as a “deliberate misinformation campaign” aimed at triggering panic buying.
• All petrol pumps across the country are adequately stocked and operating normally, with no rationing of petrol or diesel, it said.
• Separately, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) also said their pumps were operating normally and there was no shortage of any fuels.
How prices of petrol & diesel are determined?
• Prices of petrol and diesel are market-determined and Public Sector Oil Marketing Companies (OMCs) take appropriate decisions on pricing of petrol and diesel.
• The final selling prices of petrol and diesel include excise duty fixed by the central government and Value Added Tax (VAT)/taxes fixed by the respective state/UT governments.
• The prices of petrol and diesel across the country vary due to different freight rates & VAT/local levies etc. which vary from state to state.
• Despite unprecedented volatility in international crude oil and product prices due to conflicts and other extraneous factors/developments, prices of petrol and diesel in retail outlets in India, unlike other economies, have either remained stable or have in fact come down in the last four years.
• India imports a majority of its crude oil requirements and prices of petroleum products in India are linked to international markets.
• Despite volatility in global crude/petroleum prices, PSU OMCs have moderated retail petrol and diesel prices.
• The central government makes fiscal interventions whenever necessary to calibrate the tax structure applicable for petroleum products.
• PSU OMCs have also carried out an intra-state freight rationalisation.
• This has benefitted consumers located at remote areas, far from Petroleum Oil & Lubricants (POL) depots in the form of reduced petrol and diesel prices in remote parts within the states.
• This initiative has also reduced the difference between the maximum and minimum retail prices of petrol or diesel within a state.