Why Petrol Prices Vary by ₹25 per Liter Across State Borders
Under India’s Goods and Services Tax (GST) framework, five petroleum products, crude oil, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel, remain outside GST. As a result, individual state governments levy discretionary Value Added Tax (VAT) and road development cesses ranging from under 14% to over 35%.
A two-wheeler commuter in Visakhapatnam or Hyderabad pays nearly ₹25 more per liter of petrol than a rider in Port Blair, translating to an annual household transport cost penalty of over ₹18,000 for an average daily office commute.
Transport Inflation Cascading into Household Thali Costs
Because fresh vegetables, dairy, and grains travel over 400 to 1,200 kilometers across interstate highways on diesel-powered trucks, elevated state diesel taxes directly amplify retail food price inflation. In landlocked states with high state fuel levies, consumer food indices track significantly higher than in maritime port hubs.
Data from the Reserve Bank of India demonstrates that transport freight costs account for 6% to 11% of the final retail price of perishables in northern and eastern consumer markets.