Petrol Price in India

In today’s time, people love travelling by road as vehicles are now easily available and the roads too have become safe to travel. This has made petrol an essential commodity as it is important for the purpose of transportation. However, due to increase in the demand for petrol and various other factors, petrol prices have witnessed a heavy rise. The constant increase in petrol price has put an additional pressure on the consumer, thus leaving him with no choice but to pay the petrol price prevailing on that day. It is important for an individual to check the petrol price today to understand the 1 litre price and purchase it accordingly. Recently, few states in India have witnessed a heavy rise in petrol price due to a number of factors that have had a direct impact on its price.

Everyday at 6 in the morning there is a shift in the petrol price. These shifts may vary from state-to-state depending on factors like Rupee (₹) value over USD ($), OMC Rates, city and state taxes, etc. Also, these prices also vary from city-to-city in the same state. Here’s the latest petrol prices for cities in India.

Different states of India have different tax structures for petrol. Hence, each state and union territory will have different prices for petrol everyday. These prices are influenced by VAT, demand, central government tax, etc. Here is a table highlighting the latest petrol prices in states and union territories of India with VAT.

Petrol prices fluctuate throughout the year. Factors like crude oil prices, global trends, taxes, national economic policies, etc influence this fluctuation in price. Let us understand the changing trends in petrol prices in India through the example of Mumbai.

Petrol Price Trends in Mumbai (April 2024 – March 2025)

Reasons for Petrol Price Fluctuations:

• Crude Oil Price Fluctuations: Factors like OPEC+ decisions, war in oil-rich regions, and demand from China/US created fluctuations in the prices.

• Currency Exchange Rate: Value of Rupee (₹) in mid-2024 dropped causing inflated import costs.

• Tax Policies: Maharashtra’s VAT (~25% + ₹5.12/litre) kept Mumbai’s petrol prices high.

• Government Policies: Central excise duty cut in March 2024; windfall tax revisions in late 2024 helped ease up prices on petrol.

To help you understand why the petrol prices change every day, here are the few factors that have a direct impact on its cost.

• Crude oil cost: This is one of the most important factors that has a direct impact on the petrol price in the Indian domestic market. Known as unrefined oil, crude oil is an international commodity and any change in its cost impacts the Indian fuel price. The cost of the crude oil is mainly increased due its demand and supply, international political relations and future supplies and reserves.

• Rise in demand: With an increase in the number of people owning private vehicles, the demand for the fuel has increased, contributing towards the petrol price hike. Supply and demand ratio: Petrol is produced by processing crude oil, the cost of which affects the fuel price in India. Oil refinery companies in India face problem to meet the rising demand of petrol as the cost of crude oil is rising, thus resulting in less supply of petrol.

• Taxes: Petrol prices in India change in accordance with the changes in government policies that impose tax on fuels. To get marginal returns and recover the losses, Indian oil companies change their rate depending on the changing rate of taxes.

• Rupee and dollar: This is one of the very important factors having a huge impact on petrol price in India. Oil imported in India is traded in dollars. So, when the dollar strengthens against the Indian rupee, the buying cost goes high, thus impacting the cost of petrol.

• Refinery consumption ratio : The imported crude oil is sent to refineries for further processing. A low refinery ratio leads to lower quantity of petrol available for sale, thus increasing the cost of petrol.

• OMC commission: OMCs (Oil Marketing Companies) levy their commission when selling petrol. This commission covers the cost of transportation, operational costs and margins for companies like BPCL, HPCL, etc. This commission is a fixed component in the petrol pricing (which is around ₹3-4 only) which also ensures the profitability of OMCs. The commission rates occasionally change, and with it the price of petrol also fluctuates.

• Freight & transport costs: As India is a vast geography, the transport cost for petrol from the refinery to petrol pumps vary from place to place. This transport cost is also an additional component in the final pricing of petrol. Harder to reach places like a hill top may have higher petrol prices, depending on the distance from the refinery to the petrol pump.

Price of petrol in India is rapidly increasing, which makes it necessary for an individual to understand how the price is calculated.

Petrol is one commodity in India that has been kept out of the purview of the Goods and Service Tax (GST). The retail selling price of petrol in India is based on a crude oil, OMC margin, transportation cost, freight costs, central government taxes, state government taxes, excise duty and other taxes.

• Crude oil: India is one of the biggest importers of crude oil and one of the biggest components of the retail selling price of petrol. Since crude oil is required for processing petrol, oil manufacturing companies in India pay overseas crude oil companies addition charges along with the freight and insurance charges to obtain the oil. For example: If one barrel of crude oil (equivalent to 159 litres) costs Rs. 4200, then per litre crude oil costs Rs. 26.42

• OMC Costs: Oil marketing companies refine crude oil into petrol and then sell it to the dealers. These companies sell petrol to dealers adding their own profit margin, which includes transportation cost, operational costs, refinery processing cost and others.

• VAT : The value added tax on petrol varies from state to state which is why the petrol prices differ across different states and cities.

• Central and state taxes: The excise duty on petrol is the same across all the nations. Currently the excise duty levied on petrol by the Indian Government is ₹21.9 a litre.

• Petrol Price is calculated as: Retail Price = Base Price + Taxes + Commissions

Here’s an example of how the retail selling price of petrol is determined in price in Maharashtra.

*Note this is just a sample breakdown of petrol price.

The state owned OMCs (Oil Marketing Companies) like Indian Oil, Hindustan Petroleum and Bharat Petroleum everyday at 6 in the morning update petrol prices in the country. These prices vary based on the exchange rate of USD ($), changes in local taxes, cost of crude oil, etc. They use the Dynamic Fuel Pricing system in order to revise the petrol prices throughout the country.

This system overtook the previous fortnightly revisions system, giving the commuters a market-based price for petrol daily. Nearly 60,000 petrol pump stations use this system. This system requires an automated or manual updating, which is adopted by the petrol pumps. Renowned petrol companies such as Indian Oil, Hindustan Petroleum and Bharat Petroleum have made it easy for Indians to check petrol prices in an easy way by doing the following.

India has a mix of government owned and privately owned petrol stations. Any fuel related service is provided through these petrol stations. Here is a list of petrol station brands in India:

Government Owned (Public Sector) Petrol Station Brands:

• Indian Oil Corporate Limited: Brand name Indian Oil, is one of the leading fuel-service petrol station brands in India. It was founded in 1959 as Indian Oil Company Ltd. Which was later merged with Indian Refineries Ltd. in 1964 to form IOCL.

• Bharat Petroleum Corporation Limited: Brand name Bharat Petroleum, is a Fortune 500 Oil refining company, owned and run by the state. On 24th January 1976, Bharat Refineries Limited was founded. Later, Bharat Refineries Limited changed its name to Bharat Petroleum Corporation Limited.

• Hindustan Petroleum Corporation Limited: Brand name HP gas or HPCL. This Mumbai based refinery was commissioned in 1954 and in 1974, government nationalised it from ESSO operations and formed Hindustan Petroleum Corporation Limited.

Privately Owned (Private Sector) Petrol Station Brands:

• Reliance Petroleum: Brand name Reliance / Jio-bp (in partnership with BP). Previously completely owned by Reliance, in 2008, it came into partnership with Bharat Petroleum to form what is now known as “Jio-BP”. It mainly focuses on providing premium fuel and expressways.

• Nayara Energy: Formerly known as Essar Oil, has a strong presence in western and central India. It was established in the year 1989 by Shashi Ruia in Mumbai.

• Shell India: This is a global brand that can be found in India in a few urban cities. It is the second largest oil company in the world, finding its roots in India in 2004.

In Indian households, people generally indicate petrol prices with inflation. As petrol prices increase, they start saying that inflation has hit. Petrol prices impact Indian consumers in a number of ways like:

• Higher Commuting Prices
• Impact on travelling budget
• Increase in cost of consumer goods
• Travel and Logistic costs fluctuate
• Price of air transport increases
• Transporting Agricultural produce is affected
• Transporting raw materials for industries is affected
• Price of public-transport is affected

Petrol prices do not directly affect motor insurance. However, it has some effect on insurance indirectly. You might wonder how. Well, higher petrol costs leads to less personal travel, people tend to cut using private vehicles for non-essential tasks because of the rising price in petrol. Lower travel = lower chances of accidents = lower claim rates. Another such effect includes people opting for EVs and other powertrain options like diesel and CNGs based vehicles. This directly affects insurance rates as IDV changes on the vehicle’s prices. However, petrol prices do not affect third-party insurance as fuel prices are not a factor determining insurance premium.