ATF export duty reduced to ₹16/litre amid aviation sector pressure

The Indian government has reduced the export duty on aviation turbine fuel (ATF) to ₹16 per litre, offering partial relief to the aviation and refining sectors as fuel costs continue to rise amid geopolitical tensions and global energy market volatility.

The revised rate was announced late on Friday as part of the Centre’s latest fortnightly review of fuel export duties. According to a government statement cited by Reuters, export duties on diesel were also reduced, while the levy on petrol exports was increased.

The latest revision comes within a day of India raising retail fuel prices for the first time since the outbreak of the Iran conflict, underscoring growing pressure on the country’s energy and transport sectors.

Government recalibrates fuel export duties

Under the revised structure:

• Export duty on aviation turbine fuel has been reduced to ₹16 per litre
• Export duty on diesel has been lowered to ₹16.5 per litre
• Export duty on petrol has been increased to ₹3 per litre

The government said the duty revisions are conducted every fortnight and are linked to average international prices of crude oil and refined petroleum products during the review period.

Officials also clarified that there has been no change in the existing excise duty rates applicable to petrol and diesel meant for domestic consumption.

The changes reflect the government’s attempt to balance domestic energy security, export economics and rising global fuel market instability.

Aviation sector faces mounting fuel pressure

The reduction in ATF export duty comes at a particularly sensitive moment for the aviation industry.

Airlines globally, including Indian carriers, are dealing with sharply elevated operating costs because of:

• Higher aviation fuel prices
• Airspace restrictions linked to the West Asia conflict
• Longer international flight routes
• Increased fuel burn and crew utilisation
• Volatile crude oil markets

Fuel remains one of the single largest expenditure heads for airlines, often accounting for 35-40% of operating costs in India.

The aviation sector has also been under pressure from disruptions caused by geopolitical instability in the Middle East, which has forced airlines to reroute aircraft around restricted airspace.

Those detours have increased journey times on several international sectors and significantly raised fuel consumption.

Against that backdrop, lower export duties on ATF are expected to ease at least part of the cost pressure on refiners and aviation fuel supply chains.

Policy shift follows broader aviation relief measures

The Centre’s latest decision comes alongside a series of recent policy interventions aimed at reducing stress on the aviation ecosystem.

Over the past two days:

• Maharashtra reduced VAT on ATF from 18% to 7%
• Delhi lowered VAT on aviation fuel from 25% to 7%
• The Centre revised export duties on petroleum products

These moves collectively signal increasing concern among policymakers over the financial strain facing airlines during the current geopolitical crisis.

According to industry analysts, lowering fuel taxation can improve airline cash flows, support route viability and reduce the risk of abrupt fare spikes during periods of elevated fuel prices.

However, experts also note that fuel relief alone may not fully offset broader structural pressures affecting airlines.

Petrol duty raised as crude volatility continues

While export duties on diesel and ATF were reduced, the government simultaneously raised the export levy on petrol to ₹3 per litre.

The differentiated approach reflects shifting fuel demand patterns and changing export economics in global energy markets.

India reviews export duties on refined petroleum products periodically to manage domestic supply availability while also responding to international crude price movements.

The latest revisions follow significant fluctuations in oil prices since the escalation of tensions involving Iran and broader instability in West Asia.

Energy traders and aviation industry observers have warned that prolonged geopolitical conflict could continue affecting both fuel availability and pricing across global transport sectors.

Refiners and airlines watching next policy moves

India’s aviation and energy industries are now closely monitoring how long current geopolitical tensions persist and whether further policy adjustments may follow.

The government has increasingly relied on fortnightly reviews to recalibrate export duties in response to global market conditions.

For airlines, any reduction in fuel-related costs is significant at a time when operating economics remain under pressure from multiple fronts, including fleet constraints, congested airspace and fluctuating passenger demand.

At the same time, refiners continue balancing export profitability with domestic supply obligations as fuel pricing dynamics evolve rapidly.

The latest duty revision may therefore offer short-term operational relief, but the broader outlook for aviation fuel costs will likely remain tied to developments in international crude markets and regional geopolitical stability.