In an effort to balance a minimal rise in the prices of petro products and also reduce the burden on oil companies, the government is likely to cut import duties on diesel, kerosene and cooking gas (LPG) to contain the impact of spurt in international crude oil prices on the domestic market. Except for LPG, which the country is short of and has to import, government finances would not be affected by the move as the other two products are not imported at all. However, customs duty is included in arriving at the retail price of the product. According to sources in the petroleum ministry, senior officials of the finance ministry and the petroleum ministry had discussions on the issue on Friday. Once the government knocks off the customs duty element, product price thus arrived at would be lower and provide cushion to oil companies. Sources said this was one of the remedies discussed between the two ministries. A 20 per cent customs duty is levied on diesel imports and 10 per cent each on kerosene and LPG. As per the present practice of arriving at the retail price, these duties are added to the ruling import price to finalise a refinery gate price. To this refinery gate price are added excise and other duties, sales tax and dealer Commission to come to the retail selling price. The current diesel price of Rs 21.73 per litre includes a Rs 2.30 customs duty component, an amount almost equivalent to the hike oil companies have been seeking commensurate with the $6 a barrel jump in crude oil prices. Similarly, LPG price of Rs 241.59 per cylinder has an import duty component of Rs 27 and the Rs 9.01 per litre price of kerosene has about Re 1 customs duty component.
