Fuel Supply Secured: India Cuts Excise Duty, Boosts LPG Amid Hormuz Crisis

Introduction: Government Acts to Ensure Energy Security

New Delhi – The Government of India has initiated a series of comprehensive measures to secure the nation's fuel and gas supplies following the closure of the Strait of Hormuz due to escalating tensions in West Asia. Officials have reassured the public that stocks of petrol, diesel, and LPG remain adequate, while urging citizens to avoid panic buying fueled by misinformation. The government's strategy focuses on stabilizing domestic supply, managing demand, and insulating consumers from volatile international energy prices.

A Multi-Pronged Strategy to Stabilize Supply

To ensure uninterrupted availability of petroleum products, the government has deployed a combination of fiscal and operational measures. A significant step was the reduction of excise duty on petrol and diesel by ₹10 per litre, a move aimed at shielding consumers from the global oil price shock. Simultaneously, to discourage outbound shipments and bolster domestic stocks, the government imposed substantial export levies of ₹21.50 per litre on diesel and ₹29.50 per litre on aviation turbine fuel (ATF). These actions are designed to keep fuel within the country for domestic consumption.

On the operational front, all Indian refineries are running at high capacity, supported by sufficient crude oil inventories. The Ministry of Petroleum and Natural Gas confirmed that retail outlets are functioning normally across the country. While sporadic instances of panic buying led to temporary demand spikes in some regions, authorities have clarified that these were based on unfounded rumours and that fuel availability is not a concern.

Securing LPG for Households and Industries

The government has placed a high priority on maintaining the supply of Liquefied Petroleum Gas (LPG), a primary cooking fuel for millions of Indian households. Domestic LPG production from refineries has been significantly increased to meet demand and reduce reliance on imports. According to official data, daily domestic LPG refill deliveries have remained normal, exceeding 5.4 million cylinders on recent days. To curb diversion and ensure cylinders reach their intended recipients, the use of Delivery Authentication Code (DAC) based deliveries has been increased to 84%.

For commercial and industrial users, the government has systematically increased the supply allocation. The quota for commercial LPG has been raised in phases to 70% of pre-crisis levels. This includes a 10% allocation tied to state-level reforms promoting the expansion of Piped Natural Gas (PNG) networks. The latest 20% increase prioritizes labour-intensive industries such as steel, automobiles, textiles, chemicals, and plastics, which are critical for the broader economy. Since March 14, 2026, commercial entities have already lifted over 33,781 metric tonnes of non-domestic LPG.

Key Government Measures at a Glance

Accelerating the Transition to Natural Gas

The ongoing geopolitical crisis has also served as a catalyst for India's long-term strategy to transition towards a gas-based economy. The government is prioritizing 100% supply of natural gas to domestic PNG for households and CNG for the transport sector. Supplies to industrial and commercial consumers connected to the grid have been rationalized to approximately 80% of their average consumption to manage availability.

City Gas Distribution (CGD) entities have been instructed to fast-track the expansion of PNG networks, particularly for commercial establishments like restaurants, hotels, and canteens. This move is intended to reduce the strain on commercial LPG supplies. The government is actively encouraging states to adopt business-friendly reforms to facilitate this transition, linking additional LPG allocations to progress in PNG infrastructure development.

Navigating Maritime Challenges

The situation at the Strait of Hormuz, a critical chokepoint for global energy shipments, remains a key challenge. India, which imports about 60% of its LPG demand with nearly 90% sourced from the Middle East, is directly impacted. However, there are signs of a cautious resumption of movement. According to ship-tracking data, at least two India-bound LPG tankers have successfully transited the strait. While several Indian-flagged vessels have exited the zone, others remain positioned in the Gulf, highlighting the persistent logistical hurdles. The government is actively working to clear stranded cargo and diversify its sources of LPG, with additional cargoes being imported from the United States, Russia, and Australia.

Conclusion: A Proactive and Calibrated Response

The Indian government's response to the energy supply challenge has been proactive and multi-faceted. By combining fiscal relief for consumers, supply-side management, and a strategic push towards cleaner fuels, it aims to navigate the current crisis while strengthening the country's long-term energy security. Authorities continue to monitor the situation closely and have urged state governments to enhance enforcement and communication to prevent black marketing and quell misinformation. The focus remains on ensuring stable and affordable energy for all citizens and industries as the global situation evolves.