The Indian government has raised excises and taxes on fuels, in an attempt to offset the loss in revenues from falling global oil prices and weak economic growth. It has increased excise duties on gasoline and diesel by INR 3 (US$4c/l) per litre, special excise duties by INR 2/l (US$2.7c/l) (up to INR 4/l (US$5.4c/l) for diesel and up to INR 8/l (US$10.8c/l) for gasoline), and road cess on gasoline and diesel by INR 1/l (US$1.3c/l) up to INR 10/l (US$13.5c/l).
The government expects to raise up to INR 400bn (US$5.4bn) in additional revenue from these measures. Taxes on fuels are one of the largest sources of income for the central government and have more than tripled since 2014. In the 2018-2019 year (ending in March 2019), they amounted to INR 1,420bn (US$19bn), accounting for 11% of total tax revenues.
Despite this tax increase, retail fuel prices have continued to contract in India, down to INR 69.75/l (US$94c/l) for gasoline and INR 62.44/l (US$84c/l) for diesel. Indian fuel prices were liberalised in 2010 (for gasoline) and 2014 (for diesel) and have evolved according to global crude markets since then.