Fiscal Math Leaves Room For Excise Cut On Auto Fuel Of Rs 8.5 Per Litre: ICICI Securities
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ICICI Securities Report
Government of India is considering a cut in excise duty on auto fuels with a decision likely by mid March-2021.
Net marketing margin on auto fuels is at Rs 1.28/litre now and may be at Rs 1.061.46/litre on March 16, 2021 and April 01, 2021 unless prices are hiked or excise duty is cut, which is not fully passed on and boosts marketing margins.
We estimate excise duty on auto fuels in FY22E, if it is not cut, at Rs 4.35 trillion versus budget estimate of Rs 3.2 trillion.
Thus, even if excise duty is cut by Rs 8.5/litre on or before April 01, 2021, FY22E budget estimate can be met.
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