The excise duty has been reduced by Rs 10 for diesel and Rs 5 for petrol from today.
Domestic prices of both fuels have touched record highs on the back of a steep rise in crude oil cost.
Petrol has already breached the Rs 100 per litre mark and above in several cities, whereas, diesel is not far behind.
The rise in transport fuels had raised concerns over a build-up of inflationary pressure which has even concerned the RBI.
Meanwhile, the Centre urged State Governments to commensurately reduce VAT on petrol and diesel.