**Policy Summary: Government Measures to Mitigate Global Crude Oil Price Fluctuations (August 21, 2025)**
The Ministry of Petroleum and Natural Gas has implemented several measures to protect Indian citizens from the impact of volatile global crude oil prices. Despite significant fluctuations in international crude oil prices (Indian basket rising from $55/bbl in March 2015 to $116/bbl in June 2022), domestic petrol and diesel prices have been reduced. As of August 2025, prices in Delhi are Rs. 94.77/litre for petrol and Rs. 87.67/litre for diesel, down from Rs. 110.04/litre and Rs. 98.42/litre in November 2021.
Key government interventions include:
* **Excise Duty Reductions:** The Central Government reduced excise duty on petrol by Rs. 13/litre and on diesel by Rs. 16/litre in two tranches (November 2021 and May 2022), with the full benefit passed on to consumers.
* **State VAT Reductions:** Some State Governments further reduced VAT on petrol and diesel.
* **OMC Price Reductions:** Public Sector Oil Marketing Companies (OMCs) reduced retail prices of petrol and diesel by Rs. 2/litre each in March 2024. An excise duty increase of Rs. 2 per litre each on petrol and diesel in April 2025 was absorbed by OMCs and not passed on to consumers.
* **Freight Rationalization:** PSU OMCs have carried out intrastate freight rationalization, reducing price disparities and benefiting consumers in remote areas.
* **Diversification of Crude Imports:** The government has diversified its crude oil import sources to mitigate price risks.
* **Universal Service Obligation:** Provisions have been invoked to ensure the availability of petrol and diesel across the country.
* **Domestic Production:** Efforts are underway to augment domestic exploration and production of crude oil.
* **Promotion of Alternative Fuels:** The government is actively promoting the adoption of CNG, LNG, Hydrogen, biofuels (including ethanol), and electric vehicles. The National Policy on Biofuels 2018 set a target of 20% ethanol blending in petrol by 2025-26, which has been accelerated from the initial 2030 target.
* **Ethanol Blending Progress:** During the ongoing Ethanol Supply Year (ESY) 2024-25, Public Sector OMCs have achieved an average blending of 19.05% as of July 31, 2025, with 19.93% blending achieved in July 2025.
* **Biofuel Initiatives:** The government has implemented initiatives such as the Ethanol Blended Petrol (EBP) Programme, Biodiesel blending programme, and the SATAT initiative for marketing Compressed Bio Gas (CBG) along with CNG.
* **Biofuel Production Boost:** Steps have been taken to boost biofuel production across the country, including pricing incentives, alternate routes for ethanol production, the Pradhan Mantri JIVAN Yojana for second-generation ethanol biorefineries, the SATAT initiative for CBG and biomanure production, and an interest subvention scheme for enhancing ethanol distillation capacity.
Key Entities Referenced
Ministry of Petroleum and Natural Gas: The Indian government ministry responsible for the exploration, production, refining, distribution, marketing, and regulation of petroleum, natural gas, and petrochemicals.
Hardeep Singh Puri: The Union Minister of Petroleum and Natural Gas in India.
Lok Sabha: The lower house of the Parliament of India.
Public Sector Oil Marketing Companies (OMCs): Government-owned companies in India that are involved in the marketing and distribution of petroleum products.
Ethanol Blended Petrol (EBP) Programme: An initiative by the Indian government to promote the blending of ethanol with petrol to reduce reliance on crude oil imports and promote renewable energy.
SATAT initiative: A scheme for Sustainable Alternative Towards Affordable Transportation, aimed at promoting Compressed Bio Gas (CBG) production and usage in India.
National Policy on Biofuels 2018: A policy document by the Government of India outlining the framework for the development and promotion of biofuels.
Pradhan Mantri JIVAN Yojana: A scheme for promoting second-generation ethanol biorefineries using agri-residues.
Ministry of Petroleum & Natural Gas
Government takes multiple steps to safeguard
citizens from impact of global crude oil price
fluctuations: Petroleum Minister
Posted On: 21 AUG 2025 7:18PM by PIB Delhi
Union Minister of Petroleum and Natural Gas, Shri Hardeep Singh Puri, in a written reply to a starred
question in Lok Sabha today, stated that the Government is committed towards ensuring energy security,
affordability and accessibility for every citizen. He highlighted that despite international crude oil price
fluctuations, domestic petrol and diesel prices have been reduced owing to various steps taken by the
Government and Public Sector Oil Marketing Companies (OMCs).
The Minister Informed that prices of petrol and diesel are market determined and Public Sector OMCs take
appropriate decisions on pricing. The prices of petroleum products in the country are linked to the
international market, with India importing more than 85% of its crude oil requirements.
Crude oil prices (Indian basket) rose from \$55/bbl (March 2015) to \$113/bbl (March 2022) and further to
\$116/bbl (June 2022), continuing to fluctuate due to geopolitical and market factors. However, domestically,
petrol and diesel prices have reduced to Rs. 94.77 and Rs. 87.67 per litre respectively (Delhi prices) from Rs.
110.04 and Rs. 98.42 per litre in November 2021.
He stated that the Central Government reduced excise duty by Rs. 13/litre on petrol and Rs. 16/litre on diesel
in two tranches in November 2021 and May 2022, fully passing the benefit to consumers. Some State
Governments also reduced VAT to provide further relief. In March 2024, OMCs reduced retail prices of
petrol and diesel by Rs. 2 per litre each. In April 2025, excise duty on petrol and diesel was increased by Rs. 2
per litre each, but this was not passed on to consumers.
Shri Puri informed that PSU OMCs have carried out intra-state freight rationalisation, benefiting consumers in
remote areas by reducing petrol and diesel prices in far-flung regions. This has also reduced the difference
between maximum and minimum retail prices within a state.
The Government also took several measures to insulate citizens from high international prices, including
diversifying the crude import basket, invoking provisions of Universal Service Obligation to ensure
availability of petrol and diesel in the domestic market, and augmenting domestic exploration and production
of crude oil. Additionally, the Government is promoting ethanol blending and enhancing the share of
renewable energy in India’s energy basket.
Replying to a question on Government’s strategy to promote alternative energy sources, Shri Puri stated that
the Government is actively encouraging the adoption of CNG, LNG, Hydrogen, biofuels including ethanol,
and electric vehicles.
The National Policy on Biofuels – 2018 had set a target of 20% ethanol blending in petrol and 5% biodiesel
blending in diesel by 2030. This target was subsequently advanced to 2025-26. During the ongoing Ethanol
Supply Year (ESY) 2024-25, Public Sector OMCs have achieved an average blending of 19.05% as on
31.07.2025, with 19.93% blending achieved in July 2025.
To promote biofuels, the Government has implemented initiatives such as the Ethanol Blended Petrol (EBP)
Programme, Biodiesel blending programme, and the SATAT initiative for marketing Compressed Bio Gas
(CBG) along with CNG.
Further, steps have been taken to boost biofuel production across the country, including rural India. These
include pricing incentives, opening alternate routes for ethanol production, notifying the Pradhan Mantri JI-VAN Yojana for establishing second-generation ethanol bio-refineries using agri-residues, SATAT initiative
for CBG and bio-manure production from waste and biomass, and an interest subvention scheme for
enhancing and expanding ethanol distillation capacity.
****
MN
(Release ID: 2159407)