NEW DELHI – India's government has sharply revised its special additional excise duty (SAED) on petroleum product exports, increasing the levy on petrol fivefold while significantly cutting the tax on diesel. These adjustments, effective from October 16, 2026, are part of the nation's fortnightly review mechanism designed to respond to global crude oil price volatility and safeguard domestic energy security.
According to a notification from the Finance Ministry issued late on October 15, the export duty on petrol has surged from ₹0.50 per litre to ₹2.50 per litre. Conversely, the combined SAED and road infrastructure cess on diesel exports has been nearly halved, dropping from ₹16 per litre to ₹8.50 per litre. The export tax on Aviation Turbine Fuel (ATF) remains unchanged at ₹10.50 per litre.
Rationale Behind the Duty Adjustments
The Ministry clarified that these dynamic duty adjustments apply exclusively to petroleum products destined for international markets. Crucially, retail prices for petrol and diesel at domestic fuel pumps within India will remain unaffected by these changes.
The primary objective of these levies is to prevent domestic refiners, including major exporters and state-owned oil companies, from prioritizing higher overseas margins by diverting fuel abroad at the expense of local market availability. This mechanism helps ensure a consistent supply of fuel for Indian consumers.
Global Crude Price Environment
The adjustments come amid ongoing geopolitical tensions in West Asia, which have contributed to an upward trend in global crude oil prices. However, recent reports suggest potential shifts in the market, with oil prices experiencing a slight dip following indications that the US might ease sanctions on tankers to reduce shipping costs. The International Energy Agency also signaled an acceleration of emergency stock releases, which could further influence prices.
Despite these potential easing measures, persistent hostilities in the Middle East, including new attacks on vessels in the Strait of Hormuz and clashes between Saudi Arabia and Yemen’s Houthis, continue to exert upward pressure on crude prices, keeping market volatility in check. India's fortnightly review system allows for agile responses to these complex global dynamics, ensuring domestic market stability.