Congress Member of Parliament Manish Tewari criticised the Government's decision to reduce excise and customs duties on energy products as a temporary 'band-aid approach' to a much larger global energy crisis.
Speaking to reporters on April 2, Tewari said, “One can only manage a contingency by reducing excise and customs duty. The main point is up to what extent this band-aid approach would work, if we do not get sufficient crude oil and gas supply… The question is, what is the government doing to stop the West Asia war?”
The Government recently announced a complete customs duty exemption on select critical petrochemical products in response to the ongoing conflict in West Asia. The exemption will remain effective until June 30, 2026, aiming to ensure uninterrupted availability of essential petrochemical inputs for domestic manufacturing sectors.
An official statement said the measure is intended as temporary relief to stabilise supplies, ease input costs, and support downstream industries reliant on these raw materials. The exempted items include anhydrous ammonia, methanol, toluene, styrene, vinyl chloride monomer, monoethylene glycol (MEG), phenol, acetic acid, and purified terephthalic acid (PTA), among others.
Meanwhile, India’s crude oil inventories are adequate, with sufficient supplies secured for the next two months, Sujata Sharma, Joint Secretary of the Ministry of Petroleum and Natural Gas, said during an inter-ministerial briefing on April 1 amid the West Asia crisis. Assuring stability in fuel supply, Sharma stated, “Our refineries are operating at the highest levels. There have been no reports of any dry-out at retail outlets.”
She highlighted global price trends, noting, “Around two months ago, Brent crude was trading in the range of $70 per barrel, and today it has crossed $100 per barrel.” Despite this sharp rise, Sharma emphasised, “No increase has been made in petrol and diesel prices for domestic consumers.” She added, “Petrol and diesel prices have not been increased since April 6, 2022, and in March 2024, prices were reduced by Rs 2, which continues to remain in effect.”
Regarding government measures, Sharma said, “To protect domestic consumers from international price volatility, the Government of India reduced excise duty to ensure that there is no increase in prices.” However, she acknowledged, “Prices have been maintained, resulting in under-recoveries for our Oil Marketing Companies (OMCs) on both petrol and diesel.”
The decision to cut duties follows escalating tensions in West Asia, particularly the ongoing conflict involving the United States, Israel, and Iran. This conflict has led to a blockade of the Strait of Hormuz, a critical route that handles nearly one-fifth of the world’s crude oil supply. Prior to the crisis, India sourced approximately 12-15% of its oil imports through this route.
While the duty cut aims to alleviate pressure on oil marketing companies facing losses due to surging crude prices, retail prices of petrol and diesel have remained unchanged to date.