In cities like Hyderabad, petrol and diesel remain among the most expensive in India. As of 25 February 2026, the retail prices per litre in Hyderabad are around ₹107.46 for petrol and ₹95.70 for diesel.
Despite occasional nationwide price reductions, many motorists in Telangana continue to face prices that are higher than in many other parts of the country. Several key factors explain this trend:
1. High State Taxes (VAT and Cess)
The biggest reason for higher fuel prices in Telangana — and neighbouring Andhra Pradesh — is the high Value Added Tax (VAT) and other state levies that are added on top of the base cost of petrol and diesel.
Petrol and diesel prices include:
The cost of the fuel itself (linked to global crude oil prices),
Central excise duty (a national tax),
State VAT and additional tax levies that vary from state to state.
According to government data presented in Parliament, Telangana charges one of the higher VAT levels in the country — with state taxes alone adding significantly to the pump price.
Because VAT is a percentage of the fuel’s base cost, its impact increases whenever international crude prices rise — which means the final retail price can climb quickly under high VAT systems.
2. Prices Have Risen Faster Here Than Elsewhere
Over the past few years, petrol prices in Telangana have not only been high but have also increased faster than in many other major cities.
In the past five years:
Petrol prices in Hyderabad rose by more than 23 %,
This outpaced the increase in some larger metropolitan areas like Delhi and Mumbai during the same period.
Even when the central government reduced excise duty to ease prices nationally, Telangana’s fuel costs remained among the highest partly because its state-level VAT did not fall proportionately.
3. Global Oil Prices and Supply Chains
Petrol and diesel prices in India are also influenced by global crude oil prices and foreign exchange rates:
India imports most of its crude oil. When international crude prices rise due to global supply disruptions or geopolitical tensions, pump prices tend to go up too.
Similarly, when the Indian rupee weakens against the US dollar, fuel becomes more expensive in local currency.
Although Telangana’s fuel cost structure is the same national baseline as other states, high local taxes magnify the impact of these global price movements.
4. Lack of a Uniform National Tax (No GST on Fuel)
Unlike many other goods and services, petrol and diesel are not included under India’s Goods and Services Tax (GST). Without GST’s unified tax system, states have the freedom to impose their own high VAT rates and cess, leading to large price differences across states. This contributes to higher overall fuel costs in Telangana compared to some other regions.
5. Impact on Everyday Life
For motorists and businesses in Hyderabad and Telangana, high fuel prices have a ripple effect:
Commuting costs increase for two-wheeler riders, car owners, and public transport vehicles.
Goods transportation becomes more expensive, which can lead to higher prices of everyday essentials.
Inflationary pressures rise as fuel is a major input cost in many sectors.
Conclusion
In summary, the relatively high petrol and diesel prices in Hyderabad and Telangana are mainly driven by a combination of higher state taxes (VAT and levies), national tax policies, and external factors like global crude oil prices and exchange rates.
While central government tax changes can influence prices at the pump, state-level taxation remains a major determinant of the final cost that consumers pay — and in Telangana’s case, these state taxes are among the highest in the country.
