Who Sets Fuel Prices in India?
Fuel prices in India are primarily determined by Oil Marketing Companies (OMCs) such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL). These public sector companies revise petrol and diesel prices based on several influencing factors, including international crude oil prices, currency exchange rates, freight and refining costs, and local operational expenses.
Along with global and domestic cost factors, central and state government taxes play a crucial role in determining the final retail fuel price. Components such as excise duty levied by the central government and Value Added Tax (VAT) imposed by state governments significantly impact what consumers ultimately pay at fuel stations.
Since petrol and diesel prices in India follow a daily dynamic pricing system, even small fluctuations in global crude oil markets, exchange rates, or tax policies can lead to immediate changes in fuel prices across different states and cities. As a result, fuel rates may vary regionally depending on local taxes and logistical costs.
