Not Chennai, Kolkata, Chandigarh, this Indian city offers cheapest petrol and diesel

Inflation is on the rise and the price of petrol and diesel is high in almost every part of India. In a time when fuel prices are a frequent point of concern for consumers, India’s this city represents a rare example where a public utility has been kept genuinely affordable. When petrol and diesel are priced around in a range of 90-100 in almost everywhere, this city offers comparatively lesser price. Located more than 1,200 kilometres away from the mainland, it is nestled in the vast expanse of the Bay of Bengal. Though the residents face higher prices on almost every essential commodity they enjoy significantly lower fuel prices, and it is Andaman and Nicobar Islands.

According to IndianOil ONE mobile application, the price of petrol in the Andaman and Nicobar Islands on June 4, 202,5 stands at Rs 82.42 rupee per litre, while the price of diesel is Rs 78.01 per litre. Several factors affect the price of petrol on the island, Brent crude oil prices, rupee to US dollar exchange rate, geopolitical risks like war which can cause market disequilibrium, supply-chain issues, domestic conditions like changes in excise duty or state taxes, changes in demand, are among them. 

The fuel prices rates in Andaman and Nicobar Island are notably lower than those in nearby mainland cities like Chennai and Visakhapatnam. In Chennai, petrol costs Rs 100.80 per litre and diesel Rs 92.39 per litre(as of 3rd June 2025). Visakhapatnam, Andhra Pradesh offers petrol at Rs 108.35 per litre and diesel at Rs 96.22 per litre.  This surprising contrast in prices re primarily due to the unique taxation policy followed by the Union Territory administration. In India, both the central and state or UT governments levy taxes on petrol and diesel. While the central excise duty remains uniform across the country, the Value Added Tax (VAT) imposed by each state or UT varies widely, as petrol and diesel are currently excluded from the ambit of the Goods and Services Tax (GST). Andaman and Nicobar Administration levies just a 1% VAT on both petrol and diesel, the lowest rate in the country, offering affordable rates. 

Though the Andaman and Nicobar benefits from low fuel prices, the logistical and infrastructural challenges are there, which disrupts fuel supply. While these issues do not impact price, they do affect availability from time to time.