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Fuel Rate in India

Fuel rate in India are revised every day at 6 am. Fuel prices have started to revise daily since June 2017. And this method of changing the fuel price in India regularly is known as dynamic fuel pricing. Through it is made sure that even a variation of a minute in the price of a global oil can be transferred to dealers and fuel users. The government of India has given the authority to the companies of oil marketing to decide the latest fuel prices depending on the rate of exchange of currency and fluctuation in the international prices of oil.

Types of Fuel Used in Major Cities/States in India:

Major cities and states in India use four primary types of fuel. However, among them, the premium fuel price or the highest fuel price in India is the one that contains high octane value. The primary types of fuel used in India are:

  • Petrol or Gasoline - It is a type of liquid fuel made using distilled petroleum. Petrol is most commonly used in India and is comparatively cheaper to manufacture than diesel.

  • Diesel - Diesel is another most preferred type of liquid fuel in India. It provides better fuel efficiency and lower emissions.

  • CNG - Compressed Natural Gas or CNG is a type of fuel made out of natural gas. CNG is another fuel that is cheaper than diesel.

  • LPG - Liquefied Petroleum Gas (Lpg) or propane autogas is a clean-burning alternative fuel. It has been used for decades for heavy/medium/light-duty propane vehicles.

Factors Affecting the Fuel Price in India:

For the major population in India, fuel prices rising has been a crucial concern. Several crucial factors determine the fuel price in India today. A few crucial factors that are responsible for the change of the fuel cost in India are summed below in detail:

  • Crude Oil Prices - Unrefined oil or crude oil is an International market's commodity. In addition, the political international relations and supplies and reserves of the future even have a direct impact on the rates of crude oil.
  • Commission for Fuel Dealers - The OMCs pays commission to the dealers of fuel. The owner of the petrol pump has their cost, profit, and earnings coveted all in the commission provided by OMCs.
  • Excise Duty Levied by Central Government- It is a poignant point to note that the excise duty of the central government is not any percentage but predefined money. Hence the duty never changes according to the fuels' price. Over the years, the government has been increasing the number of excise duties.

  • Government Levied Tax - The government levies fuel tax in India on both diesel and petrol. Depending on certain policies, the center can change the structure of the tax. On recovery of the loss and marginal returns that are achieved from fossil fuels, the structural change is mainly dependent.

  • Fuel Demand - With the steadily increasing number of four-wheelers and two-wheelers on the roads of India, the need for both diesel and petrol is increasing. In India, the supply of diesel and petrol cannot always be fulfilled since the oil refinery businesses have to obtain crude oil out of the international market to process it into diesel and petrol.

  • Value Added Tax (VAT) Or Sale Tax - This tax is levied by the particular state governments. The VAT is computed with other few factors like excise duty that the center charges, the dealer commission, and many more.

  • INR Valuation Against USD - One of the major factors accountable for the alteration of the costs of diesel and petrol in the country is the Indian rupee value against the US dollar. As the international market supplies crude oil the transactions have to be processed in dollars which makes the USD strength against INR a direct aspect.

  • Price Imposed on Dealers - Crude oil is distributed and acquired by the OMCs Or Oil Marketing Companies. The other factors like the cost of refining, freight charges, and many more decide the fuel oil prices.

  • The Ratio of Consumption Refineries - The imported crude oil is sent for the process of refining. So if the amount of refineries is lower then the total quantity of diesel and petrol will also be lower, that indicates the less supply resulting in the higher new fuel prices.

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Several factors impact the fuel cost. These factors are the exchange rate of rupees to the dollar of the US, fuel demand, and many more. Fuel tax in India varies for each region as VAT varies as per the state. The retail selling of petrol fuel price(Petrol Price in India & Diesel Price in India) increase nearly double after the addition of excise duty, VAT, and dealer commission. This is why you can make use of a fuel cost calculator India to calculate how much fuel your vehicle will require according to your journey.


Who decides the fuel price in India today?

The fuel cost per litre in India is decided by the prices of the international crude oil. However, the fuel price increase today which you notice is due to taxes imposed by the state and central government.

Why is fuel so expensive?

India imports about 85% of the demanded crude. This is one of the major reasons why you notice fuel prices rising. The Fuel rate in India also depends on the taxes imposed by the government. As the current fuel price keeps hiking every day, you can make use of the fuel cost calculator India to calculate how much fuel your vehicle will require according to your journey.

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