India government could be contemplating a proposal to cut duties on crude oil and petroleum products to counter the high global oil prices. The proposal includes a reduction in customs duty on crude oil (from 5% to 2.5%); petrol and diesel (from 7.5% to 5%); aviation turbine fuel (from 10% to 7.5%); and naphtha, natural gas and non-domestic LPG (from 5% to 2.5%). The duty changes, if accepted, will be announced in the Union Budget.
Excise duty on petrol and diesel may also be cut by around Re 1/litre, sources said. It is estimated that a Re 1 cut in excise duty could reduce under-recoveries of oil companies by around Rs 6,650 crore annually.