India keeps fuel prices in check with tax cuts as global oil prices rise

The Indian government announced a ₹10 per litre reduction in the special additional excise duty on petrol and diesel to offset the impact of rising global oil prices caused by heightened tensions in West Asia. Finance State Minister Pankaj Chaudhary said the cut will cost the exchequer about ₹1.23 lakh crore in FY 2026‑27 but is intended to shield consumers and state‑run oil marketing companies from price shocks.

On 5 August 2026, retail fuel prices across major Indian cities remained high: petrol ranged from ₹102.12 in Delhi to ₹113.47 in Kolkata, while diesel was between ₹95.20 and ₹100.00. Prices varied due to local taxes and logistics costs. The surge in crude oil prices—over 50 % since February after U.S.–Israeli strikes on Iran and disruptions in the Strait of Hormuz—has driven these retail rates. State‑run retailers delayed passing on higher input costs, a move the government said was to protect consumers, though opposition parties accused the administration of timing price hikes around elections. The government pledged to monitor the market and take further steps as needed while maintaining fiscal discipline.