The Indian government is preparing a combination of fiscal and administrative measures to reduce the impact of global fuel price volatility while protecting the country’s fiscal health.

The move comes after sharp swings in crude oil prices due to geopolitical tensions in West Asia, which have increased pressure on oil marketing companies (OMCs), inflation and government finances.

According to government officials, the Centre intends to use a mix of targeted tax changes, calibrated excise duty adjustments and administrative interventions instead of relying on large-scale subsidies. The objective is to cushion consumers from sudden fuel price spikes without placing excessive strain on the government’s finances.

Earlier this year, the government provided support of around Rs 1.23 lakh crore to OMCs by allowing them to delay the pass-through of higher crude oil prices to retail consumers.

However, officials have indicated that such large fiscal support cannot continue indefinitely, making a more sustainable policy framework necessary.

The government’s strategy also includes strengthening India’s energy security through larger strategic petroleum reserves and diversifying crude oil import sources. These measures are expected to reduce the country’s vulnerability to supply disruptions and improve its ability to manage future energy shocks.

India imports nearly 85% of its crude oil requirements, making it highly sensitive to fluctuations in international energy markets. Stable fuel prices are important not only for consumers but also for controlling inflation, supporting economic growth and maintaining fiscal discipline.

The proposed policy framework reflects the government’s effort to balance consumer interests with long-term fiscal stability. By combining financial and administrative tools, the Centre aims to make fuel pricing more resilient while reducing the economic impact of future global oil market disruptions.

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