The Indian government has announced significant adjustments to its fuel export taxes, set to take effect from July 1. The revisions include a reduction in the windfall tax on diesel and aviation turbine fuel (ATF) exports, alongside an increase in the export duty on petrol.
Key Tax Revisions Effective July 1
- Diesel Exports: The duty has been cut to ₹8.5 per litre, down from the previous ₹14 per litre.
- Aviation Turbine Fuel (ATF) Exports: The export tax for ATF has been reduced to ₹7.5 per litre, from ₹12.5 per litre.
- Petrol Exports: Conversely, the export duty on petrol has been increased to ₹4 per litre, up from ₹1.5 per litre. This rise is intended to ensure adequate domestic supplies within the country.
Rationale Behind the Changes
These tax revisions come in response to a sharp fall in global crude oil prices, which have significantly eased from highs of over $126 per barrel. Analysts attribute this decline to reduced geopolitical tensions and the normalization of shipping through critical routes like the Strait of Hormuz, alleviating concerns over prolonged supply disruptions.
Economists now project Brent crude to average $84.50 per barrel in 2026, a decrease from last month's forecast of $90.44 per barrel. The government's decision reflects an adaptive strategy to global market dynamics and domestic energy needs.
Exemptions Remain
The existing exemption for petrol, diesel, and aviation turbine fuel exports made by public sector oil companies to neighboring countries such as Nepal, Bhutan, Bangladesh, and Sri Lanka will continue unchanged under the revised tax structure.