India's Fuel Pricing Mechanism
Deregulation and Practice
India deregulated petrol prices in June 2010 and diesel prices in October 2014, allowing Oil Marketing Companies (IOC, BPCL, HPCL) to set retail prices based on international crude prices, exchange rates, and refining margins. Daily dynamic pricing was introduced on June 16, 2017, replacing the fortnightly revision system. In theory, retail prices should closely track global crude prices with a predictable margin. In practice, OMCs have periodically frozen prices -- notably before state elections and during politically sensitive periods -- creating an asymmetric price transmission mechanism.
- Petrol deregulation: June 2010 (UPA government); Diesel deregulation: October 2014
- Daily pricing: introduced June 16, 2017; prices revised at 6 AM daily based on previous day's international prices
- Retail price composition: crude cost + refining margin + freight + dealer commission + excise duty + VAT/state tax
- Excise duty on petrol: Rs 19.90/litre; on diesel: Rs 15.80/litre (post-November 2021 reduction)
- Excise duty was hiked from Rs 9.48/litre (2014) to Rs 32.90/litre (May 2020) during low crude prices
- November 2021: excise cut by Rs 5 (petrol) and Rs 10 (diesel) ahead of state elections
● Tracked since February 14, 2026 · last seen March 19, 2026 · updates as the daily brief publishes
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