As crude oil prices at international market soar up, the Indian government is finally relenting under pressure. The petroleum ministry has proposed to hike prices of petrol by Rs 10 per liter and diesel by Rs 5 per liter along with cuts on customs and excise duty.

With the increase in number of car users in India, it has become difficult to retain the old prices. The ministry hopes to offset the impact of hike in oil prices which is now touching $135 barrel. Officials suggested a reduction in customs duty on crude oil from 5 percent to 0 and the import duty of petrol and diesel from 7.5 percent to a mere 2.5 percent. The ministry was also asking for cut on excise duty on these products.

Petroleum Minister Mr. Murli Deora said that the price hike issue had been discussed with Prime Minister Mr. Manmohan Singh on Thursday.

The prices in the country have remained stable in India since February this year, there was a marginal increase of Rs 2 and Rs 1 on petrol and diesel, respectively.

The petroleum ministry secretary Mr. MS Srinivasan said, “The situation at the international level is alarming. At the domestic front, it is not possible to withhold the prices as the petroleum deficit increases gigantically.” He said that a cabinet meeting was scheduled on Friday to discuss fuel price hike and a decision is likely to be taken within 3-4 days. Indian automobile industry is booming, and at this stage the price hike is surely going to affect the car market.

The petroleum ministry was also suggesting new prices schedule and a cut in duties on sale of petrol, diesel, LPG and kerosene.