Diesel Price in India Today

Factors influencing Diesel Prices in India

1. Since India imports roughly 85% of its crude oil needs, the price of crude oil globally has the biggest impact on diesel prices in that country.
2. An important factor is the exchange rate between the US dollar and the Indian rupee; a weaker rupee results in higher diesel prices.
3. Diesel prices are heavily impacted by taxes levied by the federal and state governments, with excise duty and VAT accounting for more than half of the retail price.
4. The final price of diesel at gas stations is influenced by refining costs, which include operational and technological expenditures.
5. Diesel's price at the pump is influenced by the logistics and transportation expenses involved in getting it from refineries to distribution centers.
6. Diesel prices are influenced by supply and demand; higher prices result from either a limited supply or higher demand.
7. The ultimate retail price of diesel includes dealer commissions that Oil Marketing Companies pay to fuel dealers.
8. Domestic diesel prices can be impacted by changes in global oil prices caused by geopolitical tensions or conflicts in oil-producing regions.
9. Diesel prices may rise as a result of regulatory changes that impact refining processes.
10. Demand for diesel can fluctuate due to seasonal factors and economic activity levels, which can impact pricing trends.

Effects of Taxes and Duties on Diesel Prices in India

1. Diesel's retail price is heavily influenced by taxes, which make up roughly 49% of the total cost.
2. Diesel is subject to a fixed excise tax levied by the central government, which as of October 2021 was Rs 31.8 per litre, or roughly 34% of the retail price.
3. Diesel sales are subject to a state-specific value-added tax (VAT), which is a percentage of the total cost and increases tax revenue as prices rise.
4. Some states impose additional taxes, like cess or surcharges, which drive up the cost of diesel.
5. Global crude oil prices and the combination of variable VAT and fixed excise taxes affect diesel price volatility.
6. Due to its vital role in logistics and transportation across numerous industries, high diesel prices are a contributing factor to inflation.
7. High fuel costs can lower disposable income for consumers, which can affect their spending on other products and services and possibly slow economic growth.
8. Diesel taxes generate a significant amount of revenue for the government, and even when oil prices decline globally, excise duty collections rise.
9. Tax reforms, like lowering excise taxes or putting fuels under the GST, are being discussed as a way to stabilize prices and lessen the burden on consumers.
10. Because tax reforms could result in government revenue losses, there are political obstacles.

How do seasonal changes influence diesel pricing trends in India?

1. Seasonal activities have a significant impact on diesel demand in India, especially in transportation and agriculture during the monsoon season.
2. The monsoon season is when agricultural activity peaks, which raises the need for diesel in equipment for transportation, irrigation, and plowing.
3. Growing agricultural output increases the need for transportation, which raises the demand for diesel even more.
4. Climate has an impact on diesel prices; heating oil consumption rises in the winter, while cooling and energy demands may cause demand to rise in the summer.
5. Supply availability is impacted by refinery operations that adapt to seasonal demand by scheduling maintenance during times of lower demand.
6. Because of delays or unfavorable circumstances like floods or heavy rains, seasonal weather can raise logistics costs.
7. Diesel prices may be impacted by government policies and taxes, with possible tax breaks occurring during elections or important agricultural times.
8. Fuel prices in India are updated daily in accordance with global crude oil prices thanks to the country's dynamic pricing model.
9. Natural disasters or geopolitical unrest can cause seasonal increases in oil prices worldwide, which can result in instant price changes at the pump.
10. The timing of agricultural operations and the need for transportation are directly related to patterns of diesel consumption.


FAQs

Why is diesel cheaper than petrol?
In India, like many countries abroad, the base price of diesel is much more expensive compared to petrol. Due to the differential taxation structure between the centre and the states, diesel prices in India have always remained much lower than that of petrol.

What are the types of diesel available in India?
Light Diesel Oil (LDO), BS IV, BS VI, Bio Diesel, Branded Diesel (with additives) etc. As of 01.04.2017, India requires on-road diesel and gasoline nation-wide to meet BSIV specifications and BS VI in the National Capital Territory of Delhi.

What are the factors impacting diesel prices in India?
Diesel price in India is an outcome of crude oil cost, supply and demand, taxes on fuel, rupee-dollar exchange rate, and refinery consumption ratio.

How is the retail price of diesel calculated?
Retail price of diesel is equal to the price at which the petrol dealers/distributors buy from OMCs + Excise duty + Dealer's Commission + VAT. Fuel prices in India are not under GST ambit.

Does diesel price in India change on a daily basis?
Yes, diesel prices in India change on a daily basis at 6:00 AM.

Why is diesel price different in all the states of India?
Since fuel prices do not come under the ambit of GST. Instead, excise duty is collected by the central government and VAT is collected by state governments. VAT differs from state to state, and hence the difference in price across states.

How are prices of Petrol, Diesel, PDS Kerosene and Domestic LPG decided?
Petrol price is determined by state-owned Oil Marketing Companies (OMCs) like Bharat Petroleum, Indian Oil and Hindustan Petroleum, and is overseen by the PPAC (Petroleum Planning and Analysis Cell) which comes under the Ministry of Petroleum and Natural Gas. The Public Sector OMCs can both raise and lower the prices.