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The company also raised diesel prices by just over one percent, it said in a statement issued late on Saturday, after a week which saw India's currency sink to a record low around 69 to the dollar.
Both changes came into effect Sunday, one month after the company last increased petrol and diesel prices.
"The INR-USD exchange rate has deteriorated sharply, from Rs.59.49/USD to Rs.63.88/USD during current pricing cycle, necessitating this price increase," IOC said in its statement.
In addition to the "extremely volatile" exchange rate, the "geopolitical situation in the Middle East is leading to pressure on international oil prices as well", the company added.
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India, the world's fourth-largest oil importer, is scheduled to go to the polls by May next year with inflation, which has often climbed to double figures in recent years, one of the main issues troubling voters.
The government has partially deregulated petrol and hiked diesel prices in an effort to contain ballooning debt c