India Adjusts Windfall Taxes on Fuel Exports Amid Global Price Changes

Changes in Export Duties on Fuel

On Tuesday, the Indian government announced a reduction in windfall taxes on diesel and aviation turbine fuel exports as global oil prices decline. The export duty on diesel has been decreased from 14 rupees to 8.5 rupees per litre, while the duty for aviation turbine fuel is now set at 7.5 rupees per litre, down from 12.5 rupees. Conversely, the export duty on petrol has been raised from 1.5 rupees to 4 rupees per litre to ensure adequate domestic supply. This adjustment will take effect from July 1, as stated in a notification from the Finance Ministry.

Additionally, the exemption from these export duties has been extended to Mauritius and the Maldives, alongside existing exemptions for neighboring countries like Nepal, Bhutan, Bangladesh, and Sri Lanka. Importantly, the ministry confirmed that there will be no alterations to the current excise duty rates on petrol and diesel intended for domestic use, ensuring that local retail prices remain stable.

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This announcement follows the central government's decision to lift restrictions on the sale of petrol and diesel, which were imposed earlier this month due to disruptions in global supply chains stemming from the US-Iran conflict. The government indicated that these restrictions would be removed on July 1. Previously, commercial fuel buyers were prohibited from purchasing petrol and diesel from retail outlets, and daily diesel purchases were capped to avert local shortages.

The June 29 order emphasized that these temporary measures were deemed necessary to ensure the equitable distribution and availability of petrol and high-speed diesel at fair prices. After assessing the current supply situation of petroleum products in the country, the ministry expressed satisfaction that it was no longer necessary to maintain the restrictions imposed on June 12.

Consequently, the Central Government has decided to withdraw the previous order effective July 1, 2026, following improvements in crude oil and fuel supplies from Gulf producers, which have resumed energy shipments through the Strait of Hormuz as regional tensions have eased.