UPDATE 1-India to raise fuel prices in major cities

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NEW DELHI, March 31 (Reuters) - India will raise the prices of petrol by 1.1 percent from Thursday in major cities that will migrate to Euro IV-compliant fuel, a government official said, to help oil firms recover investment made for plant upgrade.

"The hike will be effective from midnight tonight," said Sudhir Bhargava, additional secretary in the federal oil ministry, adding petrol prices would be raised by 0.50 rupees (about 1 U.S. cent) a litre.

Diesel price in leading cities including Mumbai would be hiked by 0.26 rupees a litre, while in Delhi it will rise by more than 2 rupees because of taxes.

"Delhi government has raised VAT (value added tax) on diesel, which will be implemented from tomorrow. Due to this, diesel prices will go up by 2.35-2.37 rupees a litre in Delhi," Bhargava said, in addition to the rise across major cities.

India is keen to cut emissions as Asia's third largest economy expands rapidly and aims to catch up with fuel quality in Europe, which now follows Euro V standards.

While 13 big cities will migrate to Euro IV-compliant fuel from Thursday, the rest of the country will switch over to Euro III-compliant fuel by October.

From April 1, Euro III-compliant fuel will be introduced in the western state of Goa, where the price of petrol will rise by 0.27 rupees a litre and diesel's price will go up by 0.22 rupees per litre.

As this fuel is introduced more widely, the price will be hiked in other parts of India as well.

For a factbox on changes in Indian fuel specifications click on [ID:nSGE60902H].

Bhargava said the increase in fuel prices is aimed at helping the oil firms, which sell fuel at government-fixed low rates, to recover the investment of about 320 billion rupees made on plant upgrades to produce cleaner fuels.

In Delhi, petrol will cost 47.93 rupees and diesel will be priced at 38.10 rupees a litre, he said. ($1=45 Rupees) (Reporting by Nidhi Verma and Pratish Narayanan; Editing by Ranjit Gangadharan, Aradhana Aravindan)