Bhutan Sells Cheaper Petrol Than India
In India, where petrol prices are around ₹ 94.72 to ₹ 107.50 per liter, the same petrol in neighboring country Bhutan is getting ₹ 58 to ₹ 67 per liter. On social media, people often ask that the country who buys petrol from India, how is it selling it so cheap? The answer is a bit complicated but the ground is based on reality.
Why is petrol expensive in India?
Petrol prices in India are increased to such an extent because it includes a lot of tax. When an Indian customer buys a petrol of ₹ 100 per liter at a petrol pump, a large part of it is of tax of the central and state governments. This includes.
- Central excise duty
- State VAT (Price Added Tax)
- Dealer commission
This is the reason that despite the fall of crude oil prices in the international market, Indian consumers do not get direct benefit from it. The tax policy of the government is so heavy that the base price of petrol gets manifold.
| Price component | Price per liter |
| Dealers price to be charged | ₹ 55.66 |
| Dealer commission (average) | ₹ 3.77 |
| Excise Duty (by Central Government) | ₹ 19.90 |
| VAT (implemented by the state government) | ₹ 15.39 (Dealer Price + Commission + 19.4%on Excise) |
| Retail selling price in Delhi | ₹ 94.72 |
Why is petrol cheaper in Bhutan?
The government of Bhutan definitely buys petrol from India, but it provides to its citizens at cheap prices through low tax or subsidy. That is, the government does not put the tax burden on the citizens there. This is the reason that the same petrol in Bhutan is being sold for ₹ 58 to ₹ 67 per liter, which is around ₹ 100 in India.
Bhutan is a small country with a total population of about 8 lakhs and the consumption of petrol is very limited there. In such a situation, the distribution costs are also low and it is easy to manage subsidy. Apart from this, Bhutan does not impose any heavy excise duty on petrol.
Petrol is cheaper than India in these countries
According to a report of money control, the average price of petrol in India is Rs 101 per liter. At the same time, it is Rs 80.4 in Pakistan and Rs 85 per liter in Bangladesh. In many other countries, the rates are also lower than India.
| Country | Average price of petrol (octane‑95) (₹/liter) |
| Hong Kong | 304 |
| India | 101 |
| China | 94.5 |
| Bangladesh | 85 |
| Pakistan | 80.4 |
| America (US) | 79.4 |
| Russia | 67.1 |
| Bhutan | 58.8 |
| Iran | 2.4 |
| Libia | 2.3 |
Petrol is produced either cheaper in these countries than in India (eg Iran, Libya) or tax burden is reduced (eg Bhutan, Pakistan). Countries like America themselves produce more than 60% of their needs, while India imports about 90% crude of its need.
Crude is not just the price, tax is also the real reason
Dynamic fuel pricing system is applicable in India, ie petrol prices vary daily. But even when the prices of crude oil fall, the general public gets very little relief because the government does not reduce tax rates.
Along with this, imports are expensive when the rupee is weak, which increases the cost of petrol and diesel. The fall of the rupee against the dollar also consistently air to petrol inflation.
Recent months have seen huge ups and downs in the international oil market due to Iran-Israel War and US sanctions. However, OPEC+ countries have decided to increase production in August 2025, which has led to some softness in prices.