Centre cuts special additional excise on petrol, diesel by ₹10
DUTY REVISION. No change in retail prices; windfall gain tax reintroduced for refiners
Shishir Sinha / Rishi Ranjan Kala — New Delhi
Offering relief to oil marketing companies (OMCs) amid rising crude oil prices due to the West Asia conflict, the Finance Ministry on Friday reduced the special additional excise duty (SAED) on petrol and diesel by ₹10 per litre with immediate effect. Simultaneously, the government reintroduced the windfall gain tax on export-bound diesel and aviation turbine fuel (ATF) by refiners.
However, there is no change in the retail prices of petrol and diesel. Additionally, there will be no reduction in the devolution pool for States as the basic central excise duty remains unchanged.
The government estimates a net loss of ₹5,500 crore in the first fortnight after adjusting for windfall tax gains. While official estimates for the full year have not been provided, economists expect the annual net loss to the exchequer to be between ₹1.5 lakh crore and ₹1.7 lakh crore. The decision to revise the duty structure followed a meeting convened by the Prime Minister on Thursday.
PROTECTING CONSUMERS
“The government had two options — either pass on the increase to consumers (by way of an increase in the petrol and diesel prices) or take a hit (by cutting the excise duty). The government chose the latter,” Finance Minister Nirmala Sitharaman said.
She further noted that duties have been levied on diesel exports at ₹21.5 per litre and on ATF exports at ₹29.5 per litre. Vivek Chaturvedi, Chairman of the Central Board of Indirect Taxes & Customs, explained that the windfall tax on exports is expected to generate approximately ₹1,500 crore in the first fortnight, while the government will forgo over ₹7,000 crore in revenue due to the excise duty cut. This results in the projected net loss of ₹5,500 crore.
EXPORT RATIONALE
Chaturvedi explained that the surge in international prices had incentivized refiners to prioritize exports. The levy of the export tax aims to ensure the availability of fuel for domestic consumption. This tax will be reviewed on a fortnightly basis to align with prevailing market rates.
Furthermore, the government has mandated that domestic refiners supply 50 per cent of exported petrol and 30 per cent of exported diesel to the domestic market.
FISCAL BURDEN
Madhavi Arora, Chief Economist of Emkay Global, stated that the move would help absorb 30-40 per cent of the annualized losses OMCs are facing on auto fuel at current prices. She estimated the annualized fiscal hit to the government at ₹1.55 lakh crore due to this burden-sharing.
DK Pant of India Ratings & Research provided a slightly higher estimate, suggesting that if the excise duty remains at this level throughout FY27, it could cost the government ₹1.70 lakh crore.
Kerala should have gained most from GST but gets low compensation, says VD Satheesan, Leader of the Opposition
bl interview
Chitra Narayanan / V Sajeev Kumar — New Delhi / Kochi
Kerala’s Opposition leader and senior Congressman VD Satheesan says the party is ready with an economic plan to lift the State out of its severe financial crisis. “For the first time, an Opposition has done its homework and prepared alternative programmes for the future to combat the failures of the present government,” he said, stressing that the public will see a puthuyuga (new age) Kerala.
Edited excerpts:
Are you confident that UDF will win 100 seats? We will come back with 100-plus seats. That is our prediction, and it is on the basis of history. In almost all the States, the Opposition has been losing byelections, but we won here in Kerala with double, triple margins in all byelections. We also won the elections to the local bodies. In the Parliamentary election, we won 18 out of the 20 seats. First, there is a huge anti-incumbency sentiment. Second, we have been exposing the government for a long time on its failures.
At the same time, two years ago, for the first time in India, an Opposition started to research and work on alternative programmes. Our promise is that wherever the government fails, we will give you alternative projects.
What are these alternative programmes? Our narrative has been that in healthcare, Kerala is on the ventilator. We conducted a health conclave in 2025, in which more than 300 doctors from India and abroad participated, and then we presented a very good health document. In higher education, our narrative was that brain drain is happening in Kerala and within five years, Kerala will be an old age home. Then we produced a very good report on how to prevent the large exodus by improving our education systems. Our assessment is that the nature of jobs has been changing across the world. So, corresponding to that, we have to restructure the curriculum.
For start-ups, too, we have prepared a very good document that talks of providing management mentors, techno mentors and a revolving fund. We have talked of dream projects such as coastal shipping. We have a 600-km-long coastline and two international seaports, one container terminal and 17 mini ports. We have declared that we are going to start coastal shipping and cruise shipping. Then we have four international airports, two of which are under the government. We will start 27 aviation projects if we win.
What about attracting investments to the State? We are inviting ideas; we want to showcase more than 1,000 projects in various sectors. Investors will be treated as state guests, as will the NRIs, the backbone of the Kerala economy through the remittances they send. 10 per cent of the NRI remittances will be channelised for infrastructure development through PPP projects; the government will only be a facilitator.
But Kerala is almost bankrupt, how will you restore the coffers? I have made a presentation as the leader of the Opposition before the 16th Finance Commission. The commission appreciated it because of the homework we have done. The number one plan is to introduce a planned tax administration, then we will cover all the leakages from the Treasury; then we will stimulate the economy through projects.
Kerala is a consumer State. It should have been the number one beneficiary in India for GST. Unfortunately, we are getting very low compensation.
Do you think Sabarimala will be a central issue in this election? It will be a major issue because 2019 onwards gold pilferage was happening, and the court has clearly mentioned that the dwarapalaka idols were sold to a millionaire. The CPM and the government have protected all three senior leaders involved in the issue and have not taken any disciplinary action against them.
Everyone wants to know who will be chief minister if the UDF comes to power... That is the narrative of the CPI(M) because you know in Karnataka and Telangana, there was no chief ministerial candidate. After the Karnataka election, Siddaramaiahji became the CM. Similarly, Revanth Reddy became the CM in Telangana. We are united. We are working together.
So, will the selection be from Kerala or the high command? It will be from the high command after taking the opinion of the elected MLAs. That is the procedure. For the last several years, the Congress has not projected any chief ministerial candidate anywhere in India.
This factor of the Gandhi family representing Wayanad in Parliament — how much will this help UDF in State politics? It will help a lot. Because Malayalis like the Gandhi family very much. They treat both Rahulji and Priyankaji as their children.
The five guarantees that Rahul Gandhi announced — where are the funds for that? The insurance scheme is very good because in our health document we made it clear that Kerala is the number one State when it comes to high out-of-pocket expenses. That is why we have examined the insurance scheme implemented by the Rajasthan government when Ashok Gehlotji was Chief Minister. It was a very good project. As for free bus rides for women, I don’t think that after one year, there will be any burden on the government side; we also have a plan to make KSRTC self-reliant.
Grim future for world economy
DHANANJAY SINHA
The global economy is vacillating between sharply swinging narratives from the US administration under President Donald Trump and responses from Iran. Markets have reacted with volatility, oscillating between expectations of an imminent ceasefire and fears of prolonged confrontation. Investors are struggling to price in the long-term implications beyond immediate headlines.
In the immediate term, the announcement of a five-day war interregnum (now extended to 10 days) from the US side has provided some respite for markets. Yet it remains uncertain whether this pause can evolve into a lasting amicable resolution.
Historically, the US has rarely accepted outright submission in armed operations of this nature. The current context makes any decision to de-escalate even trickier, as America stands at a critical inflection point where its global hegemony, both economic and geopolitical, is visibly eroding. The stated objectives of the operation in Iran, including regime change, full control over nuclear capabilities, and access to oil reserves, remain largely unfulfilled. Given the asymmetric nature of the conflict, Iran retains leverage through its ability to disrupt oil supplies and maintain elevated prices, using these as bargaining tools to extract concessions.
Even in a scenario of quicker de-escalation, disruptions to crude and gas supplies, along with damage to infrastructure in the Strait of Hormuz region, will take considerable time to repair. Consequently, it is reasonable to assume that oil prices may remain elevated for longer than many market participants currently anticipate.
Irrespective of how the war fares, efforts to combat the growth and inflation fallouts are likely to be actively considered. Wars have historically been followed by lagged economic rebounds, often fuelled by substantial government spending on reconstruction, infrastructure, and defence.
However, in the current environment, such efforts face significant headwinds from peak levels of public debt and the pressing need for higher defence budgets, which constrain fiscal space for other forms of stimulus. Stagflation is imminent, with demand compression and recession as a likely outcome.
Borrowing costs have risen due to structural factors including declining global savings rates and early signs of de-dollarisation pressures, while bond markets demand higher risk premiums for sovereigns with record debt burdens.
According to the Institute of International Finance (IIF) Global Debt Monitor, global debt surged by nearly $29 trillion during 2025, pushing the worldwide total to a record $348 trillion. Of this increase, advanced economies accounted for the majority, with governments (both in advanced and emerging markets) contributing a substantial share. Continued fiscal expansion and regulatory adjustments are expected to drive further debt accumulation, raising legitimate concerns about long-term sustainability.
In the US, the public debt-to-GDP ratio has climbed to approximately 122 per cent as of late 2025. Commitments to defence, infrastructure, and entitlements leave limited room for additional stimulus without pushing yields higher and crowding out private investment.
Similar constraints appear elsewhere. The Eurozone’s average debt-to-GDP stands near 90 per cent, while the UK’s ratio is about 105 per cent. Japan leads with a ratio exceeding 250 per cent. China’s official figure hovers around 80 per cent, but including significant hidden local government obligations paints a more strained picture. Emerging markets average 65-70 per cent, though outliers such as India (around 85.5 per cent, or ₹325 lakh crore by FY27E) and Brazil (near 90 per cent) face tighter margins.
With the Iran conflict potentially anchoring oil prices in the $90-100 range for an extended period, governments may prioritise targeted measures such as energy subsidies and elevated defence budgets, necessitating further borrowing.
NARROW POLICY OPTIONS
In India, policy challenges confronting both fiscal and monetary authorities are formidable. Central and State government debt combined could approach ₹325 lakh crore (around 83 per cent of FY27 GDP estimates), with the Centre’s debt alone reaching ₹214 lakh crore in FY27E, nearly four times the level of FY14. The budgeted fiscal deficit for FY27 stands at ₹17 lakh crore, while the combined Centre-plus-States figure may reach ₹29-30 lakh crore, leaving scant room for counter-cyclical stimulus. The additional ₹9-10 lakh crore annual oil import burden will ultimately be distributed across industries, oil marketing companies, households, and government budgets through some combination of higher prices, subsidies, and taxes.
Rising subsidy demands and increased allocations for defence and livelihood support will necessitate difficult expenditure trade-offs. For the RBI, pre-existing challenges have been magnified. Despite substantial liquidity injections and rate cuts, 10-year G-sec yields have firmed to around 6.85 per cent, while the rupee has weakened to record lows near 94 against the dollar. India’s current account deficit could exceed $100 billion in FY27E under sustained $100 oil, approaching the FY08 peak. Persistent declines in foreign investment flows could result in a balance of payments deficit for a third consecutive year, potentially reaching 3.3 per cent of GDP (a two-decade high).
CLOUDY MARKET OUTLOOK
Indian equity markets are navigating elevated uncertainties surrounding corporate earnings, capital flows, and valuations. Foreign portfolio investors (FPIs) have been net sellers of around $43 billion in equities since September 2024. Domestic institutional flows into equity mutual funds have shown resilience, aggregating $59 billion over the period. However, systematic investment plan (SIP) data indicates that the number of outstanding SIPs has stagnated since October 2024, while participation from affluent segments has grown as smaller investors face negative returns.
Resilient domestic flows have not fully offset FPI outflows, resulting in valuation compression: the Nifty’s trailing price-to-earnings multiple has fallen 14 per cent from September 2024, to around 20x. Should FPI retrenchment continue, falling valuations and moderating retail enthusiasm could exert sustained downward pressure.
An optimistic scenario might involve a sudden halt to hostilities due to massive economic costs, but such outcomes appear low-probability at present.
The writer is CEO and Co-Head of Equities & Head of Research, Systematix Group. Views are personal.
FMCG firms coping with surging raw material costs
Meenakshi Verma Ambwani — New Delhi
One month into the West Asia conflict, the FMCG industry is coping with surging packaging costs due to rising crude oil prices and rupee depreciation. Rationalising of commercial LPG has also had some impact on production for some sectors. In categories such as edible oils, packaged water and paints, players have already begun taking price hikes. Others said if the conflict continues, calls on price hikes will need to be taken by later next month.
A senior industry executive said, “Packaging material prices have gone through the roof. PET resin prices have now gone up to ₹143 per kg and is expected to cross ₹150 per kg by next week. This coupled with the rupee depreciation could mean the situation will worsen. Some price hikes have already been taken by the packaged drinking water industry; such a ₹18 pack is now priced at ₹20. Prices may need to be hiked again if things worsen”.
Meanwhile, Asian Paints, Berger Paints and Kansai Nerolac have already announced price hikes. Analysts believe paint players are likely to take a second round of price hikes if higher crude oil prices persist. Edible oils players have also had to take price hikes due to heightened costs. Shrikant Kanhere, MD & CEO, AWL Agri Business said, “The edible oil prices are closely linked to crude oil. Due to the West Asia conflict, all the imported edible oil prices are already up by 10-15 per cent across the board and so that price increase is already reflecting”.
FRESH HEADWINDS
A report by BNP Paribas noted that FMCG companies had seen improvement in demand trends in Q3 FY26 and were well poised for sustained growth in the coming 4-6 quarters. However, the West Asia conflict has led to fresh headwinds leading to concerns about rising costs, export order cancellation and LPG gas availability, it added.
Mayank Shah, Vice President of Parle Products, said, “Higher crude oil prices have led to higher packaging costs. Price of commercial LPG has also gone up and since there is rationing there have been some challenges. We are using alternatives wherever possible in our plants but there has been some impact on production on some lines. So, if all these issues persist, we will have to take a call on price hike towards the end of April or early May”.
Shah said that the packaged food industry has also urged the government that in terms of allocations for commercial LPG, packaged food manufacturing plants should be considered essential.
Indian airlines face headwinds, ICRA revises outlook to negative
WAR IMPACT. West Asia is an important market for Indian carriers and cancellations will impact revenue, says an expert.
Aneesh Phadnis — Mumbai
Indian airlines continue to face a double whammy of revenue loss arising from flight cancellations and increased expenses due to airspace closures and extended flight durations. Indian carriers are currently not operating to Bahrain, Doha, and Kuwait, while offering only limited services to Oman, Saudi Arabia, and the UAE. Geopolitical tensions have resulted in the further weakening of the rupee, and domestic jet fuel prices are expected to witness a sharp price revision starting April 1.
OPERATING PRESSURES
IndiGo has stated it may need to recalibrate its capacity as the operating environment remains fluid. The airline reported a material escalation in operating costs, with fuel and forex-related expenses expected to increase substantially. “While we have introduced a fuel surcharge to compensate for some of this cost, this and other fare increases required will have an effect on demand,” IndiGo stated.
An aviation expert noted that West Asia is a critical market for Indian carriers, and the current cancellations will significantly impact revenue. This disruption occurs during what would typically be a busy travel season driven by Eid holidays in West Asia and school and college vacations in India.
OUTLOOK REVISION
Rating agency ICRA on Friday revised its outlook on the Indian aviation industry to negative from stable, citing intense cost pressures and downside risks to demand. ICRA now expects domestic air passenger traffic growth for FY26 to be between 0-3 per cent. International passenger traffic growth for Indian carriers is projected at 7-9 per cent, indicating a relatively weak near-term demand environment.
ICRA’s earlier growth forecasts for FY27, which were formulated prior to the West Asian conflict, had estimated domestic air passenger traffic growth at 6-8 per cent and international growth at 8-10 per cent. However, the rating agency stated that these projections now carry a significant downward bias.
Valley bets big on homegrown tulips
Nabard-backed project aims to curb ₹300-400 cr annual imports
Gulzar Bhat — Srinagar
At the Mountain Crop Research Station (MCRS) in the Valley, efforts are being stepped up to cultivate tulips and develop seeds locally to cut import dependence. Sher-e-Kashmir University of Agricultural Sciences and Technology (SKUAST-K) is setting up a Centre of Excellence for Tulip and Bulb Production at Sagam in Anantnag, about 76 km from Srinagar. Scientists aim to propagate tulips and supply seeds and bulbs to gardens.
The project, backed by the National Bank for Agriculture and Rural Development (Nabard), focuses on land and infrastructure development. “The idea is to reduce dependence on imported tulip bulbs,” said Mohammad Ayoub Mantoo, Head, MCRS, adding that India spends an estimated ₹300-400 crore annually on tulip bulb imports, underlining heavy reliance on overseas suppliers.
TOURISM BOOST
The garden — now the Indira Gandhi Memorial Tulip Garden — sprawling across 74 acres at the foothills of the Zabarwan range, draws lakhs of visitors each spring.
Officials say developing indigenous varieties and scaling local bulb production can cut costs and stabilise supply. Research institutions in Kashmir are actively working toward this goal.
Trump extends deadline for striking Iran’s energy plants to April 7
NO END IN SIGHT. US President says talks with Tehran ‘going very well’; Iran maintains stance of no engagement
Reuters — Dubai/Tel Aviv/Washington
US President Donald Trump said he would again extend a deadline for Iran to reopen the Strait of Hormuz or face the destruction of its energy plants, after Tehran earlier rejected a 15-point US proposal to end the fighting.
The war has spread across the Middle East, killing thousands of people and hitting the global economy with soaring energy and fertiliser prices that have fuelled inflation fears. On Thursday, Trump threatened during a cabinet meeting at the White House to increase pressure on Iran if it did not make a deal. He later posted on social media that he would pause threatened attacks on Iranian energy plants for 10 days until April 6 at 8 pm (0000 GMT on April 7).
“Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well,” he added in his Truth Social post.
PAKISTAN MEETING
Iran has said it is not engaged in talks with Washington. Trump has not specified who the US is purportedly negotiating with in Iran, where many high-ranking officials have been killed in the war.
German Foreign Minister Johann Wadephul told Deutschlandfunk radio that he had information that “there have been indirect contacts, and preparations have been made to meet directly”. “That would be very soon in Pakistan, apparently”. Pakistan, which has good relations with Iran, passed on Washington’s 15-point proposal, and is willing to host meetings.
On March 23, Trump announced a halt to all threatened strikes against power plants and energy infrastructure for five days. In Thursday’s post, he said he had announced the new pause in response to an Iranian request, although there was no immediate reaction from Tehran.
IRAN’S RESPONSE
Iran has said it will respond with its own strikes on energy facilities in the Gulf region if Trump follows through with his threat. Iran has effectively blocked the Strait of Hormuz, which carries about 20 per cent of global oil and liquefied natural gas, driving up energy prices and roiling financial markets.
Millions of civilians in the region rely on electricity to power their cities and supply fresh water from desalination plants. Strikes on three buildings in the Pardisan area of Qom, south of Tehran, killed at least six people, Iranian media reported. In Tehran, rescue workers from the Red Crescent pulled a survivor from rubble. In Urumia, in the north-west, a direct missile strike on a housing complex killed and injured several civilians, with rescue operations continuing, Iranian media said.
IRANIAN ARRESTS
In the west Iranian province of Kermanshah, the Islamic Revolutionary Guard Corps said it had arrested a three-member cell linked to Israel’s Mossad spy agency that had planned attacks on sensitive sites and military personnel, Iranian media reported. In the central province of Isfahan, authorities arrested more than 15 people alleged to work for the foreign-based Iran International and Manoto TV networks, which state media describe as Israeli-affiliated.
Brace for $200 per barrel oil if the war lasts till June, warns Macquarie
Bloomberg
Crude oil may hit a record $200 a barrel if the Iran war drags on till June, with the Strait of Hormuz staying shut, Macquarie Group Ltd has said.
A conflict that stretches through the second quarter would result in historically high real prices, analysts, including Vikas Dwivedi, said in a note, outlining a scenario with odds of 40 per cent. An alternative outlook, with a probability of 60 per cent, suggested the war may finish at the end of this month, they said.
RECORD MONTHLY RISE
Brent crude is on pace for a record monthly gain in March, as the war between the US, Israel and Iran has rocked the oil-rich Middle East. The conflict has seen Tehran oversee a near-complete closure of the Strait of Hormuz, severely restricting flows of energy that are vital to the global economy.
“If the Strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand,” the analysts said in the March 27 report. “The timing of the re-opening of the straits, and physical damage to energy infrastructure, is the main determinant of the longer-term impact on commodities”.
Brent was last near $107 a barrel on Friday, after touching $119.50 earlier this month. The benchmark set a nominal peak of $147.50 in 2008, according to data compiled by Bloomberg.
China launches tit-for-tat probes against US trade ahead of Xi-Trump summit in May
Bloomberg
China started a pair of investigations into US trade practices, retaliating against similar probes by the Trump administration as the superpowers stake out positions before an expected presidential summit in May. The move, announced by the Ministry of Commerce on Friday, is a direct mirror of steps US President Donald Trump took to revive his tariff agenda after the Supreme Court last month struck down some of his duties.
“China expresses its strong dissatisfaction and firm opposition to these actions,” a Commerce Ministry spokesperson said in a statement, referring to the so-called Section 301 investigations initiated on March 11. The Chinese measures come days after the White House said Trump will travel to China in mid-May to meet with President Xi Jinping for a summit delayed by the US conflict with Iran.
POWER PLAY
The attacks on Iran, a diplomatic partner of China, brought new strains to US-China ties, although both governments have sought a path of engagement. Relations are also dogged by lingering issues including China’s record trade surplus and US arms sales to Taiwan, a self-ruled democracy China claims as its territory. Beijing hasn’t yet confirmed Trump’s visit to China.
Each of the new investigations carries a six-month deadline, with a possible three-month extension, giving Beijing a legal justification for leverage. One such probe was brought separately against Mexico...
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