Petrol-Diesel Prices Slashed in Pakistan, Bhutan & Nepal—Why Is India Still Paying More?
Global crude oil prices have declined significantly following the easing of tensions between the United States and Iran. Brent crude, which had surged to nearly $126 per barrel during the conflict, has now slipped to below $72 per barrel.
The sharp fall has prompted several countries, including Pakistan, Nepal, Bhutan, Myanmar, Bangladesh, China and Sri Lanka, to lower petrol and diesel prices. However, Indian consumers are still waiting for relief at the fuel pumps.
So why haven't fuel prices been reduced in India despite the sharp decline in crude oil prices?
So why haven't fuel prices been reduced in India despite the sharp decline in crude oil prices?
Fuel Prices Fall Across Neighbouring Countries
According to data from Global Petrol Prices, several countries have announced cuts in retail fuel prices in recent weeks.
Petrol Prices
Bhutan: Reduced from Rs.109.73 to Rs.99.94 per litre.
According to data from Global Petrol Prices, several countries have announced cuts in retail fuel prices in recent weeks.
Petrol Prices
Bhutan: Reduced from Rs.109.73 to Rs.99.94 per litre.
Pakistan: Dropped from Rs.130.82 to Rs.101.91 per litre.
Bangladesh: Declined from Rs.112.68 to Rs.111.71 per litre.
Myanmar: Fell from Rs.140.20 to Rs.116.09 per litre.
China: Reduced from Rs.132.81 to Rs.119.09 per litre.
Nepal: Marginally declined from Rs.136.41 to Rs.135.57 per litre.
Sri Lanka: Fell from Rs.142.00 to Rs.140.12 per litre.
In comparison, the average petrol price in India remains around Rs.108.71 per litre.
Diesel Prices
Neighbouring countries have also reduced diesel prices.
Diesel Prices
Neighbouring countries have also reduced diesel prices.
Bangladesh: From Rs.90.10 to Rs.88.60 per litre.
Bhutan: From Rs.104.68 to Rs.104.12 per litre.
Pakistan: From Rs.139.07 to Rs.105.98 per litre.
China: From Rs.119.92 to Rs.106.20 per litre.
Myanmar: From Rs.140.13 to Rs.118.58 per litre.
Sri Lanka: From Rs.137.12 to Rs.135.31 per litre.
Nepal: From Rs.141.34 to Rs.140.57 per litre.
India's average diesel price, meanwhile, continues to hover around Rs.98.10 per litre.
India's average diesel price, meanwhile, continues to hover around Rs.98.10 per litre.
Why Haven't Fuel Prices Been Reduced in India?
Despite the fall in global crude oil prices, petrol and diesel prices in India are influenced by several factors beyond the cost of crude oil.
1. Multiple Factors Determine Retail Fuel Prices
Despite the fall in global crude oil prices, petrol and diesel prices in India are influenced by several factors beyond the cost of crude oil.
1. Multiple Factors Determine Retail Fuel Prices
Retail fuel prices are calculated based on international crude oil prices, refinery costs, transportation expenses, dealer commissions, exchange rates and various taxes.
During the recent geopolitical tensions, India delayed raising retail fuel prices for nearly two and a half months despite rising global crude prices. Oil marketing companies are now believed to be recovering losses incurred during that period instead of immediately passing on the benefits of cheaper crude to consumers.
During the recent geopolitical tensions, India delayed raising retail fuel prices for nearly two and a half months despite rising global crude prices. Oil marketing companies are now believed to be recovering losses incurred during that period instead of immediately passing on the benefits of cheaper crude to consumers.
2. High Taxes and Government Levies
A significant portion of the retail price of petrol and diesel in India consists of central excise duty and state-level value-added tax (VAT).
Even when crude oil prices fall, governments do not always reduce these taxes, which means consumers may not see an immediate reduction at fuel stations.
A significant portion of the retail price of petrol and diesel in India consists of central excise duty and state-level value-added tax (VAT).
Even when crude oil prices fall, governments do not always reduce these taxes, which means consumers may not see an immediate reduction at fuel stations.
Previously, during the conflict period, the central government had reduced excise duty on both petrol and diesel by Rs.10 per litre, a move that reportedly resulted in a revenue loss of nearly Rs.1 lakh crore.
3. Oil Companies Follow a Price Balancing Strategy
3. Oil Companies Follow a Price Balancing Strategy
State-owned oil marketing companies, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), do not always revise retail fuel prices in line with daily fluctuations in global crude oil prices.
Instead, they often adjust prices gradually to account for previously purchased high-cost crude oil inventories and maintain pricing stability. This strategy helps companies recover earlier losses before passing on the benefits of lower crude prices to consumers.
