India Cuts Fuel Tax Amid Surge in Global Oil Prices

The Indian government has cut the special additional excise duty on petrol and diesel fuels amid a surge in global oil prices due to geopolitical tensions in the Middle East. This policy was enacted as the global energy market experiences volatility, particularly following conflicts involving Iran that have disrupted worldwide oil supplies and pressured energy-importing nations like India. According to a government notification on Thursday (26/3/2026), India’s Ministry of Finance has lowered the additional tax on petrol to 3 rupees per litre, approximately Rp 537 (assuming an exchange rate of Rp 178.82 per rupee), down from the previous 13 rupees per litre, equivalent to about Rp 2,324. This policy takes effect immediately. The move comes amid a sharp rise in global crude oil prices. World oil prices have increased significantly since late February 2026, after conflicts between the United States (US) and Israel with Iran caused disruptions to major energy distribution routes. These disruptions have even pushed global oil prices above the $100 US per barrel level, reflecting significant pressure on the international energy market. This situation places high-import-dependent countries like India under strain. Citing the Daily Mirror, India is the world’s third-largest oil importer and meets more than 90 percent of its oil needs from abroad. India’s Minister of Petroleum, Hardeep Singh Puri, stated that the government faces a difficult choice between significantly raising prices for citizens or bearing the fiscal burden itself. “The government has two choices: drastically increase prices for the public or shoulder the burden itself,” he said, quoted from the Hindustan Times. In addition to protecting consumers, this policy is intended to dampen inflationary pressures triggered by rising energy and transportation costs.