India has slashed excise duties on petrol and diesel to protect consumers and rein in a potential spike in inflation, while imposing windfall taxes on aviation fuel and diesel exports, amid volatile global oil markets as a result of the Iran conflict.

Global oil prices have surged past $100 per barrel after the near closure of the Strait of Hormuz, which ​serves as a conduit for 40 per cent of India’s crude oil imports, since the US and Israel first struck Iran on February 28.

In a government order released late on Thursday, India’s finance ministry reduced the special excise duty on petrol to INR3 ($0.0318) per litre from INR13 earlier. It also cut the duty on diesel to zero from INR10 per litre.

Read more-India’s steel ministry seeks intervention for mills facing LPG shortages

The government did not say how much the duty cuts would cost. The move comes ahead of elections next month in four Indian states and one federal territory, with Indian voters known to be extremely sensitive to higher prices.

“Government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies, approximately INR24 a litre for petrol and INR30 a litre for diesel, at this time of sky high international prices, are reduced,” Oil Minister Hardeep Singh Puri said in a post on X.

Madhavi Arora, an economist at Emkay Global, estimated the annualised fiscal hit to be nearly INR1.55trn rupees. The duty cuts would absorb about 30 per cent to 40 per cent of annual losses of oil marketing companies on auto fuel at current prices, she said.

The yield on 10-year government bonds rose 7 basis points to 6.95 per cent, its highest level in 20 months, while shares of oil marketing companies such as Bharat Petroleum Corp and HPCL rose more than 4 per cent at the open, but later pared gains.

While fuel prices in India are technically deregulated, state-run oil companies, which control 90 per cent of the retail fuel network, do not always raise prices when crude prices increase.

As a result, Indian consumers are shielded from price volatility, with either the government or the oil companies absorbing the increases.

Windfall tax on exports

The diesel export tax was set at INR21.5 a litre as well as a INR29.5 a litre tax on the export of aviation fuel, the order said.

Between April 2025 and January 2026, India exported 14 million metric tonnes of gasoline and 23.6 million tonnes of gas oil. Most Indian refiners have stopped exporting fuels, and Reliance Industries is the country’s biggest fuel exporter.

India’s Finance Minister Nirmala Sitharaman said the government will ensure that there is no shortage in supply of petrol, diesel and jet fuel.

It will support oil marketing companies so that citizens are spared from any price hikes and also ensure that prices of jet fuel do not go up, the minister told news agency ANI.

India is the world’s third-biggest oil importer and consumer and imports most of its fuel.

In a letter dated Thursday, the petroleum ministry said it will raise the allocation of liquefied petroleum gas to commercial and industrial users by 20 per cent, taking total supply to 70 per cent of pre-crisis levels.

The increase builds on an existing 50 per cent allocation, with priority to be given to sectors such as steel, automobiles, textiles and other essential industries. India had cut gas allocation for non-cooking purposes after the start of the Iran war.

India consumed 33.15 million metric tonnes of cooking gas last year, with imports accounting for about 60 per cent of demand. About 90 per cent of those imports came from the Middle East.

Prime Minister Narendra Modi and his government have stressed adequate arrangements are in place, including for the supply of fertilisers for the summer sowing season and coal to meet rising electricity demand.

US President Donald Trump said he would again extend the deadline for Iran to reopen the Strait of Hormuz or face the destruction of its energy plants, after Tehran had earlier rejected a 15-point US proposal to end the fighting as unfair.

The four-week conflict has spread across the Middle East, killing thousands of people and hitting the global economy with soaring energy prices, fuelling global inflation fears.

The US and Israel launched strikes on Iran on February 28 during talks with Tehran about its nuclear programme that had not yet yielded a deal.

Read more-Trump orders five-day pause on strikes targeting Iran energy sites

On Thursday, Trump threatened during a cabinet meeting at the White House to increase pressure on Iran if it did not make a deal. He later posted on social media that he would pause threatened attacks on Iranian energy plants for 10 days until April 6 at 8 pm. Eastern daylight time (0000 GMT on April 7).

“Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well,” he added in his Truth Social post.

Iran has said it is not engaged in talks with Washington and Trump has not identified who the US is negotiating with in Iran, with many high-ranking officials killed in the war.

On March 23, Trump announced a halt to all threatened strikes against power plants and energy infrastructure for a five-day period, but has now extended it to 10 days.

Trump told Fox News’ “The Five” program that the Iranians had asked for a seven-day pause on strikes on energy plants.

There was no immediate reaction from Tehran, but the Wall Street Journal cited peace talk mediators as saying Iran did not ask for a 10-day pause on such strikes.

Iran has said it would return strikes on energy facilities in the Gulf region if Trump follows through with his threat.

Iran has effectively blocked the Strait of Hormuz, which carries about 20 per cent of global oil and liquefied natural gas, spiking energy prices and roiling financial markets.

The prospect of tit-for-tat strikes on civilian infrastructure could further rattle global markets and threaten the livelihoods of millions of civilians in the region who rely on electricity to power their cities and supply fresh water.

Iran says strikes hit residential areas

Iranian media reported strikes on residential areas in Tehran, Qom, Urumia in the early hours of Friday morning.

Three residential homes in the Pardisan area of Qom, south of Tehran, were struck, killing at least six people. In Tehran, rescue workers from the Red Crescent pulled a survivor from the rubble of a residential building that was hit by airstrikes.

A housing complex in the northwestern city of Urmia was struck by a direct missile attack, killing and injuring several civilians and destroying at least four residential units. Emergency responders were dispatched to the scene as rescue operations continue.

Israeli military said on Friday it struck ballistic missile production sites and air defence systems across Iran overnight, including targets in Tehran and western regions, in operations that the Israeli military says it is aimed at degrading Iran’s missile capabilities and reducing threats to Israel.

The conflict has massively disrupted shipping, sending crude oil prices up around 40 per cent, seen liquefied natural gas prices spike, and prices for nitrogen-based fertilisers, critical to food production, rise around 50 per cent.

Stock markets, having fallen sharply in the US and Europe on Thursday, followed suit in Asia on Friday as investors worried about the conflict dragging on.

“Many see the Iranian regime as holding the upper hand and doubt that there are indeed productive negotiations with the US in process,” said ITC Markets senior FX analyst Sean Callow.

An Iranian official told Reuters that a 15-point US proposal, conveyed to Tehran by Pakistan, was reviewed in detail on Wednesday by senior Iranian officials and the representative of Iran’s supreme leader, who felt it served only US and Israeli interests.

However, diplomacy had not ended, the official said.

The proposal included demands ranging from dismantling Iran’s nuclear program to curbing its missiles and effectively handing over control of the Strait of Hormuz, according to sources and reports.

The UAE can expect unstable, rainy weather on Friday, March 27, according to the National Centre of Meteorology (NCM).

The forecast features partly cloudy to cloudy conditions, accompanied by some convective clouds with heavy rainfall over most areas of the country in intervals, and a decrease in temperatures.

Moderate to fresh winds – strong at times – can cause dust and sand to rise, reducing the horizontal visibility over exposed areas.

Authorities across the country have issued their own advisories to counter unstable conditions and heavy rain experienced throughout the week.

Sharjah’s municipal alerts note that the emirate will see cloudy skies and intermittent heavy showers, while Fujairah has already recorded some of the strongest rainfall this week, with certain areas seeing accumulations approaching 50mm, according to reports.

Dubai Municipality teams remain on standby to manage waterlogging and drainage in low-lying areas, while police and traffic departments in multiple emirates have urged motorists to drive slowly, avoid flooded underpasses and maintain safe distances as visibility drops during sudden downpours.

Meteorologists say the system is being driven by a combination of surface and upper-air low-pressure zones, creating repeated waves of convective clouds capable of producing intense rainfall over short periods.

While the worst of the activity is expected to taper after Friday night, forecasters say lingering cloud cover and breezy conditions may persist into the weekend, even as rain chances decline.

UAE weather update from March 28-31: NCM

The UAE will see a stretch of shifting weather conditions from Saturday through Tuesday, with temperatures dipping again and winds strengthening at times, according to NCM.

On Saturday, March 28, the country will see fair to partly cloudy skies, along with another drop in temperatures. Northwesterly winds will blow at moderate to fresh speeds and may turn strong at intervals, kicking up dust and reducing visibility. Wind speeds are expected to range between 15 and 25 km per hour, reaching 40 km per hour at times. Sea conditions will be rough in both the Arabian Gulf and the Oman Sea.

Sunday, March 29, will bring similar conditions, with fair to partly cloudy skies and periods of increased cloud cover. Winds will shift from Northwesterly to Southeasterly during the day, light to moderate in general but strengthening occasionally and raising dust. Wind speeds will stay between 15 and 25 km per hour, with highs of 40 km per hour. The sea will remain rough to moderate in the Arabian Gulf and rough in the Oman Sea.

Monday, March 30, is forecast to stay fair to partly cloudy, with cloudier periods developing in western areas by night. Winds will vary from Northwesterly to Southwesterly, light to moderate and freshening at times, again lifting dust. Speeds will range from 15 to 25 km per hour, peaking near 40 km per hour. The Arabian Gulf will be slight, while the Oman Sea will be rough to moderate.

On Tuesday, March 31, conditions will turn partly cloudy to cloudy at times with a chance of rainfall over western and southern areas and islands. Northwesterly to Southwesterly winds will stay light to moderate but may freshen over northern coastal waters. Wind speeds will range from 10 to 25 km per hour, reaching 40 km per hour at times.

The Arabian Gulf will be slight to moderate and may turn rough northward, while the Oman Sea will remain slight to moderate.

Authorities continue to advise residents to follow official updates from the NCM and local municipalities and to avoid sharing unverified weather information.

Dubai has released a series of rain-themed videos and images across its official social media channels, highlighting the emirate’s changing weather conditions as recent rainfall sweeps across the UAE.

In a post on X, the Dubai Media Office shared a video captioned “Beautiful Dubai,” offering a visual snapshot of the city during rainfall. The content, accompanied by additional images, captures wet streets, overcast skies, and the rare sight of sustained rain in a typically arid environment.

The posts come as the UAE experiences a period of unstable weather, with authorities warning of intermittent rainfall and varying intensities across several emirates through late March.

Recent days have seen heightened weather activity across the country, with heavy rain, thunderstorms and strong winds reported in parts of UAE, disrupting transport and daily operations.

Air travel has also been impacted, with delays, cancellations and diversions recorded at major hubs including Dubai International Airport.

Read more: UAE weather alert: NCM issues driving advisory during rain

Images credit: Dubai Media Office

Regional tensions have sparked broader concerns across GCC states, including the UAE, about the potential economic impact.

A Gulf Business report earlier this week on how employees can navigate salary cuts in the UAE prompted a wave of responses from readers who commented via our LinkedIn page.

Read more: Salary cuts amid regional tensions? What UAE employees need to know

While the law is clear — salaries cannot be reduced without employee consent — several LinkedIn commentators pointed to the pressure employees face in practice.

“Power is not always equal,” said Rohit Bassi on Gulf Business’ LinkedIn post about the story, adding that challenging decisions is “not always practical”.

Meanwhile, another LinkedIn user, Swilem, noted that “employee awareness remains critical”. From a governance perspective, Shadi Al Shorbagy commented that salary cuts should be a “last resort”, while Dina Roshdy added that “a salary is more than just a number”.

The response highlights a clear question: the rules are defined, but how they play out depends on how both sides navigate a more uncertain environment.

To unpack what the law says, and what it means in practice, Gulf Business spoke to employment legal expert Luke Tapp, partner at Pinsent Masons. Below is the full Q&A with him, which goes deeper into the issue and outlines a key rule that employers, in particular, need to take heed of.

Q&A with Luke Tapp, partner at Pinsent Masons

What does UAE labour law say about salary reductions, and what formal steps must be followed?

An employer cannot reduce an employee’s salary without the employee’s express written consent.

Whilst the Labour Law does not directly refer to unilateral salary reduction, it states that:

• An employer must pay the employee’s salary on the due date; and
• An employment contract cannot be modified unless both parties agree to the change in writing.

The effect of these provisions is therefore that an employer must pay the employee’s salary in the contractually agreed amount, unless the employee has consented to a salary reduction in writing.

War or geopolitical tensions do not, of themselves, create any legal exception to this rule. Whilst the Ministry of Human Resources and Emiratisation (MOHRE) has the option to introduce legislation that would accommodate unilateral salary reductions in certain circumstances, at present, no such legislation has been enacted. Employers should therefore monitor the situation and, if legislation is enacted that would accommodate unilateral salary reductions, ensure that they familiarise themselves with any requirements before moving to unilaterally reduce salaries (for example, a directive issued during the COVID-19 pandemic specifically required that employers notify MHRE of salary reductions via a template contract amendment document prepared by MHRE for this purpose).

In the meantime, where salaries will be reduced with employees’ consent, there are no specific formal steps that would need to be taken save for obtaining consent in writing. Practical guidance for obtaining consent is set out below.

The other practical consideration that employers should be aware of is the Wage Protection System, which monitors the monthly payroll of employees employed by onshore UAE entities and entities established within certain free zones. If employers operating within these areas reduce salaries without notifying the WPS, this could trigger a breach of the WPS, which will then result in operational and financial penalties. Therefore, we recommend that the WPS is notified of any such changes.

Employee consent is required — how should this process be handled in practice?

Unlike in some international jurisdictions, there is no official consultation process. However, given the need to secure consent, a form of consultation is likely to be necessary in order to explain the situation to employees and provide them with the opportunity to pose any questions they may have.

Practically speaking, during historic economic downturns, many employers have opted to hold “town hall” meetings in order to relay the company’s plan and enlist employee support, and thereafter circulate a document for employees to sign and return in order to acknowledge their consent to the reduction. Whilst there is no reason why an employer could not simply issue a written communication in the first instance, many employers adopt a “human communication” approach, as this is generally perceived as being favourable from an employee relations perspective. If headcount and resources allow, some employers may also wish to consider scheduling one-on-one meetings with impacted employees in order to rationalise the request and provide employees with the opportunity to raise questions.

The written consent may be given either via wet ink or electronically. However, as above, employers should be mindful of any specific requirements that MHRE may introduce.

If employees do not agree to a salary reduction, what options do they have?

Where an employee will not agree to a salary reduction, the options available to employers are as follows:

1. Apply the salary reduction anyway. This approach is not recommended due to the fact that it would constitute both a breach of contract and a breach of the employer’s obligations under the Labour Law. The potential consequences here would be:
   – Employees may file complaints with MHRE. If MHRE (or, if the complaint is referred, to the courts) upholds the complaint, the employer may be ordered to release the shortfall to the employee. Employees would have two years from the date on which their employment terminates in order to claim any unpaid salary, meaning that this risk would remain “live” for a significant period;
   – Employees may resign, citing breach of contract / constructive dismissal. As well as creating the risk of employees filing claims in respect of the salary shortfall, resignation would crystallise employees’ termination payment entitlements (such as end of service gratuity), thereby creating immediate financial liability for the employer;
   – From an employee relations perspective, this approach may create discontent amongst the workforce and impact on performance; and
   – Companies that are required to pay salaries via the UAE’s Wage Protection System (WPS) may become non-compliant with their WPS obligations. This may result in a company’s portal becoming blocked, which is likely to cause operational difficulties (for example, applying for visas).
2. Restructure and / or terminate employment. Whilst we would recommend that an employer considering this option obtains legal advice, in theory, termination would be relatively low risk on the strict condition that the employee has not already filed a complaint with the concerned authorities. Where a complaint has already been filed, there is a risk that the termination would be deemed unlawful by the courts and the employee awarded compensation (up to a maximum of three months’ full salary). Employers should also be mindful of additional liabilities that are likely to be created by termination (i.e. termination will trigger an employer’s obligation to pay out termination dues such as end of service gratuity). Subsequently, employers will need to weigh the long-term cost-saving objective of reducing salaries against the immediate liability that termination is likely to create.
3. Consider alternate means of cost reduction. Specifically, employers may consider:
   – Placing employees on a period of unpaid leave. However, given that this also requires employee consent at present, it is possible that an employer will encounter the same employee resistance; or
   – Instructing employees to use their paid annual leave. Whilst this is still such that salary would remain payable in full, it would allow the employer to schedule employee absence so that leave is used during commercially quieter periods, meaning that employee availability would be guaranteed as and when business begins to recover. As per the Labour Law, employers may “fix” the dates on which employees must use their annual leave, provided that they notify the employee no less than one month in advance.

From an employer perspective, what is the correct legal process to implement such changes?

In terms of unpaid leave, the only requirement is that employees’ consent is obtained in writing. Again, there is no legal consultation process that must be followed. However, employers should ideally adopt the most employee-friendly approach possible, both from a humanitarian perspective and in order to optimise the prospect of obtaining consent.

Where employees are required to use their paid leave balance, any form of written communication will satisfy legal requirements, provided that it is issued no less than one month in advance of the leave date.

If an employer chooses to reduce headcount, again, the sole requirement is that each impacted employee is notified of their termination in writing. Where employers are considering redundancies as an option, we strongly recommend that they seek legal advice.

Do you see a real risk of salary adjustments in the current environment, and how should employees prepare?

It is inevitable that the current geopolitical situation will create economic disruption in the region due to interruption to key industries and investor uncertainty. Whilst it remains to be seen whether salary adjustments will be endorsed or supported by MHRE, many businesses are making cost-reduction contingency plans in anticipation of a downturn. In light of this, employees may wish to consider:

• upskilling in critical functions to reduce the prospect of being impacted by headcount reduction (for example, AI, cloud, cybersecurity, data);
• familiarising themselves with company benefit policies in the expectation that the company may well exercise any discretion it has in terms of paying out additional benefits and/or bonuses;
• preparing for the fact that increments may be deferred; and
• avoiding entering into long-term financial commitments during this time of economic uncertainty.

How might this situation impact the broader job market and recruitment trends, particularly given recent salary stagnation?

Hiring and recruitment trends are likely to vary sector by sector. In vulnerable industries such as tourism and hospitality, logistics, and oil and gas, we would expect hiring freezes, whereas sectors such as technology, cybersecurity, and healthcare remain relatively resilient due to ongoing digital transformation, security needs, and essential service demand. It is therefore possible that these areas will experience growth and will thus enter into a phase of increased recruitment.

That said, businesses’ manpower requirements will also be impacted by trends in workforce behaviour. Where a large number of foreign workers opt to repatriate and create high staff turnover, the need to fill vacancies may result in increased competition amongst businesses, particularly in locally stable sectors.

Whilst we would expect many industries to focus on stability rather than expansion in the current climate, we anticipate an increase in the following trends:

• “remote” roles;
• core functions being moved offshore;
• reduction in niche or non-essential roles;
• hybrid job descriptions; and
• preference for candidates with cross-disciplinary skills.

How does the current legal framework compare to the Covid period, when temporary measures were introduced — and do you expect any regulatory flexibility if conditions worsen?

During the COVID-19 pandemic, a circular was issued which authorised employers to take certain actions in order to reduce workforce-related costs during the period of economic turndown. Measures included the option of reducing salaries, placing employees on unpaid leave, and a more employer-friendly termination regime. Whilst both salary reduction and unpaid leave still required employee consent, the introduction of the legislation served to clearly communicate to employees that the authorities were mindful of the pandemic’s impact on business, and were prepared to support employers in identifying ways to reduce costs and ultimately increase the prospect of the company surviving.

Whilst it is certainly possible that the authorities will demonstrate the same commercial empathy during this particular period of economic disruption, certain evolutions within the field of employment law since the pandemic are such that temporary legislation may not be necessary. Specifically:

• The overhaul of the Labour Law in 2022 (i.e. UAE Federal Law Number 8 of 1980 being repealed in favour of UAE Federal Decree Law Number 33 of 2021 (as amended)) relaxed termination rules. Although the law still does not go so far as to include a specific redundancy framework, the removal of the concept of arbitrary dismissal from the law is such that termination with notice is now far lower risk than it was during the pandemic. Given that employers now have greater flexibility to rely on the Labour Law’s termination provisions in order to restructure their workforce or reduce headcount, MHRE may take the view that supplementary legislation is not necessary; and
• Given that the pandemic was unprecedented, businesses were poorly equipped to adapt. Now, however, the prevalence of remote working both regionally and internationally is such that employers are better placed to transition to remote working at short notice. Whilst this would not necessarily be an effective means of cost saving in light of the economic impact of the geopolitical situation, it certainly puts businesses in a stronger operational position when factors such as government-issued security alerts disrupt physical workplace attendance.