India's recent petrol and diesel price hikes of around ₹5 per litre mark the first adjustments in nearly four years, following a prolonged period of price stability during global crude oil fluctuations. This decision came after the government absorbed the impact of rising crude prices, which peaked amid geopolitical tensions, by implementing excise duty cuts and fiscal support measures. Despite these increases, India recorded one of the smallest price adjustments globally, with petrol prices rising only 5% from February to May 2026, whereas countries like Myanmar and Pakistan saw increases of nearly 90% and 54%, respectively.

The Indian government significantly reduced the Special Additional Excise Duty (SAED) on fuel, with diesel excise duty effectively lowered to zero, costing the exchequer approximately ₹30,000 crore. However, high state-imposed VAT rates in certain regions have led to higher retail prices, with states governed by the INDIA bloc, such as Andhra Pradesh and Telangana, charging some of the highest rates in the country. In contrast, BJP-ruled states maintain lower VAT rates, resulting in cheaper petrol prices. This ongoing strategy reflects India's approach to managing fuel costs through fiscal measures rather than immediate price pass-through, differing from many other nations' practices during energy crises.