Here's why Indian customers pay more than those in Pakistan, Nepal for petrol

Kochi: The Indian consumer shells out much more than those in neighbouring countries for petrol and diesel.

Even though India is a developing country with a low per capita income, the fuel prices in the country are similar to those in rich, developed nations. In fact, the prices are rising even more.

The oil marketing companies hiked the prices of fuel for the 17th consecutive day on Tuesday, making petrol costlier by 20 paise per litre and diesel by 55 paise per litre. The cumulative price increase on petrol during this period adds up to Rs 8.5 per litre and Rs 10.01 per litre for diesel.

The frequent hike in excise duty by the Centre and sales tax by the state governments are said to be the main reasons for the high fuel prices in India.

The Goods and Services Tax (GST) was introduced to usher in uniform tax across the country. But since fuel does not fall under the ambit of the GST, customers end up paying a high price for petrol and diesel.

If petrol is put even under the highest 28% slab of the GST, then the total taxes on the fuel will be 50%, considering the 22% cess that is applicable on it. This would mean the retail price of petrol would be only about Rs 37, considering that it costs about Rs 23 per litre when it reaches a petrol pump.

But, now, not only is fuel kept out of the GST, customers are also not getting the benefit of low oil prices in the international markets.

When the oil prices were at their lowest during the COVID-19 lockdown period in India, the central government announced one of the highest increases in excise duties on petrol and diesel. While the excise duty on petrol was hiked by Rs 13 per litre, the duty on diesel was increased by Rs 10 per litre.

The prices of petrol and diesel have been increased daily in the past 17 days.

The oil marketing companies justify the hike by saying the value of the dollar against the rupee has been increasing, which results in higher import cost.

But then the question is if the dollar is getting stronger, it should affect the import bill of neighbouring countries, too. However, the prices of fuel in those countries have not gone up as much as in India.

Petrol prices high due to 227% taxes

On June 16, petrol was delivered at pumps for Rs 22.44 per litre. However, customers ended up paying Rs 76.99 per litre that day.

This is how the price of petrol goes up and ends up pinching the retail customer. Dealer commission: Rs 3.60; central taxes: Rs 32.98; and state taxes: Rs17.97. In other words, the taxes are about 227% of the actual cost of petrol.

Similarly, diesel reaches a pump for Rs 23.23 per litre, but it costs the retail customer Rs 71.29 after adding taxes that are 191% of the actual cost (central taxes: Rs 31.83 and state taxes: Rs 13.70)

This is much higher than the prices of petrol and diesel per litre in various neighbouring countries, as is evident from the table below (prices on June 16, in Indian rupees):

Country        Petrol price    Diesel price

Pakistan        34.52            37.13

Sri Lanka       66.21            42.77

China            63.33            42.77

Nepal            60.28            53.77

Bhutan           49.86            46.31

Myanmar         36.58            32.52

Bangladesh      80.13            58.52