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Correspondent

21 August 2024 at 10:20:16 am

Fuel Shock

The latest increase in petrol and diesel prices — the fourth hike in just 11 days — underlines how vulnerable India remains to geopolitical turmoil and its own unfinished reforms in the energy sector. Brent crude surged again after fresh American military strikes in southern Iran deepened fears of the renewal of the Iran conflict on a higher scale. Markets are now gripped by uncertainty as hopes of a negotiated settlement continue to fade. For a country like India, which imports more than 80...

Fuel Shock

The latest increase in petrol and diesel prices — the fourth hike in just 11 days — underlines how vulnerable India remains to geopolitical turmoil and its own unfinished reforms in the energy sector. Brent crude surged again after fresh American military strikes in southern Iran deepened fears of the renewal of the Iran conflict on a higher scale. Markets are now gripped by uncertainty as hopes of a negotiated settlement continue to fade. For a country like India, which imports more than 80 percent of its crude oil requirements, every geopolitical tremor in the Gulf quickly translates into pain at the fuel pump. Since May 15, petrol and diesel prices have risen cumulatively by nearly Rs. 7.5 per litre. In Hyderabad and Thiruvananthapuram, petrol has crossed Rs. 115 a litre. Mumbai, Kolkata, Bengaluru and Chennai are all witnessing sharp increases. Even Delhi, traditionally cushioned by relatively lower taxes, has seen petrol move beyond Rs. 102 per litre. This marks a significant shift after nearly four years of relative stability in retail fuel prices. For long periods, state-run oil marketing companies absorbed the burden of elevated crude prices, shrinking refining margins and a weakening rupee. Political considerations, particularly around elections, often delayed price revisions. The Rs. 2 per litre reduction announced ahead of the 2024 national elections was a reminder that fuel pricing in India has never been entirely divorced from politics. But oil companies cannot indefinitely absorb mounting losses, especially when global crude prices remain elevated. The Centre has already cut excise duties, with Finance Minister Nirmala Sitharaman estimating the revenue sacrifice at nearly Rs. 1 lakh crore. That fiscal cushion has now largely been exhausted. The spotlight is therefore shifting towards states. VAT on fuel remains one of the most lucrative revenue streams for state governments, with some states imposing levies exceeding 30 percent through taxes and cess components. This explains why states such as Telangana, Kerala and West Bengal continue to record some of the highest retail fuel prices in the country. The Centre is now subtly nudging states to reduce VAT rates to soften the blow on consumers. Yet states are reluctant. Their dependence on fuel taxes is structural, not incidental. Apart from excise on liquor, few revenue sources offer such steady and politically manageable returns. Bringing petrol and diesel under the GST framework continues to face bipartisan resistance from states fearful of losing fiscal autonomy. Rising fuel prices do not remain confined to petrol stations. They seep into every layer of the economy as transportation costs rise, food inflation accelerates and household budgets shrink. Small businesses, already coping with weak consumption and high borrowing costs, are facing renewed pressure. India’s recurring vulnerability to crude oil shocks exposes the limits of its energy security architecture. Expansion of strategic petroleum reserves and greater investment in renewable energy can no longer remain aspirational talking points. They must become urgent national priorities.

India, France may jointly develop nuclear reactors

  • PTI
  • Feb 12, 2025
  • 3 min read

Updated: Feb 14, 2025

France

New Delhi: India and France on Wednesday expressed an intent to jointly develop modern nuclear reactors, emphasising that nuclear power was crucial for energy security and transition to a low-carbon economy.


The two countries signed a letter of intent on Small Modular Reactors (SMRs) and Advanced Modular Reactors (AMRs), according to a joint statement issued after Prime Minister Narendra Modi met French President Emmanuel Macron in Paris.


"Prime Minister Modi and President Macron stressed that nuclear energy is an essential part of the energy mix for strengthening energy security and transitioning towards a low-carbon economy," according to the statement.

SMRs are compact nuclear fission reactors that can be manufactured in factories and then installed elsewhere. They typically have a smaller capacity than conventional nuclear reactors.


The two leaders also acknowledged the strong civil nuclear ties between India and France and efforts in cooperation on the peaceful uses of nuclear energy, notably in relation to the Jaitapur Nuclear Power Project.


They also renewed a memorandum of understanding between India's Department of Atomic Energy and France's Commissariat a l'Energie Atomique et aux Energies Alternatives of France, concerning cooperation with the Global Center for Nuclear Energy Partnership (GCNEP).


Both the nations agreed to enhance collaboration in training and education for nuclear professionals.


India aims to generate 100 gigawatts of nuclear energy by 2047 as part of its transition to clean energy.


Earlier this month, the government announced plans to launch a Nuclear Energy Mission with a budget of Rs 20,000 crore to support research and development of SMRs. As part of the initiative, India plans to operationalise at least five indigenously developed SMRs by 2033.


To enable private sector participation, the government is considering amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.


At present, nuclear power plants contribute 1.8 per cent of India's total installed power capacity of 462 gigawatts and around 3 per cent of total electricity generation. This helps save around 41 million tonnes of carbon dioxide annually.


In its Long-Term Low Emission Development Strategy submitted to the UN climate change office in 2022, India projected a threefold increase in installed nuclear capacity by 2032.


Talks over trade and business

Prime Minister Narendra Modi and French President Emmanuel Macron on Wednesday called for enhancing trade and investment ties between the two countries and committed to further deepening their engagement in the Indo-Pacific and various global forums and initiatives.


After their wide-ranging talks, the two leaders also underlined their commitment to concrete actions to ensure that the global AI sector can drive beneficial social, economic, and environmental outcomes in the public interest.


A joint statement issued after the meeting here said the talks covered a full spectrum of bilateral relations, as well as key global and regional issues.


The two leaders stressed an urgent need for reform in the United Nations Security Council and agreed to coordinate closely on various global issues, including the UNSC matters.


French President Macron reiterated France's firm support for India's permanent membership of the UNSC.


The two leaders reaffirmed their strong commitment to India-France Strategic Partnership while noting that it has steadily evolved into a multifaceted relationship over the past 25 years.


Prime Minister Modi flew together from Paris to Marseille in the French Presidential Aircraft last evening and held discussions here on the full spectrum of bilateral relations and key global and regional issues.


This was followed by delegation-level talks after arrival in Marseille.

The two leaders reviewed cooperation in the strategic areas of defence, civil Nuclear Energy and Space. They also discussed ways to strengthen collaboration in the fields of Technology and Innovation.


This area of partnership assumes greater salience in the backdrop of the just concluded AI Action Summit and the upcoming India-France Year of Innovation in 2026, the statement said.


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