Government raises windfall tax on diesel, ATF exports; petrol levy unchanged

The Indian government has increased the windfall gains tax on exports of diesel and aviation turbine fuel (ATF), while leaving the levy on petrol exports unchanged, according to a Finance Ministry notification issued on Monday.

The revised duties will come into effect from June 16, marking the latest fortnightly review of export taxes introduced in response to disruptions in global energy markets and concerns over domestic fuel availability.

The move comes against the backdrop of heightened tensions in the Middle East, which have pushed up international crude oil prices and raised concerns about energy security.

Revised export duty rates take effect from June 16

Under the latest revision, the special additional excise duty (SAED) on diesel exports has been raised to Rs 14 per litre, up from Rs 13.5 per litre.

The duty on ATF exports has been increased more sharply to Rs 12.5 per litre, compared with Rs 9.5 per litre earlier.

However, the government has decided not to alter the export levy on petrol.

Key changes announced by the Finance Ministry include:

• Diesel export duty: Increased to Rs 14 per litre from Rs 13.5 per litre

• ATF export duty: Increased to Rs 12.5 per litre from Rs 9.5 per litre

• Petrol export duty: Unchanged at Rs 1.5 per litre

• Domestic fuel duties: No changes to existing duty rates on petrol and diesel sold within India

The revised rates were notified by the Finance Ministry and will remain in force until the next scheduled review.

Government seeks to maintain domestic fuel availability

According to reports from Press Trust of India (PTI), the export duties were originally imposed to discourage excessive overseas sales of petroleum products and ensure adequate domestic availability during a period of geopolitical uncertainty.

The government first imposed export duties on diesel and ATF on March 26, following a sharp escalation in tensions in the Middle East. The rates have since been reviewed every fortnight.

A separate export duty on petrol was introduced on May 16, extending the windfall tax framework to another key transport fuel.

Officials have maintained that the objective is to prevent exporters from benefiting disproportionately from widening price differentials between domestic and international markets during periods of elevated crude prices.

Oil market volatility remains a key concern

The latest increase reflects continued concerns over global oil market instability.

Crude prices have remained under pressure following the conflict involving Iran, the United States, and Israel, developments that have heightened fears of supply disruptions from a region that remains critical to global energy flows.

By adjusting export duties, the government aims to reduce incentives for refiners to divert larger volumes of fuel overseas when international prices rise significantly above domestic levels.

The policy also seeks to cushion the domestic market from sudden shortages and sharp price dislocations that can emerge during periods of geopolitical stress.

Further reviews likely as global developments evolve

India's windfall tax regime remains linked to developments in international energy markets, with export duties reviewed every fortnight.

Future revisions are likely to depend on movements in crude oil prices, refining margins and the broader geopolitical situation in the Middle East.

For now, the latest changes signal the government's continued focus on balancing export opportunities for refiners with the need to ensure adequate fuel availability within the country.