India raises windfall tax on diesel, jet fuel exports; cuts levy on petrol exports

The Indian government on Wednesday raised windfall taxes on diesel and aviation turbine fuel (ATF) exports while cutting the levy on petrol exports, effective July 16 in its latest fortnightly review of windfall tax.

According to finance ministry notifications, the export duty on petrol has been reduced to Rs 2.5 per litre from Rs 4 r per litre.

The windfall tax on diesel exports has been increased to Rs 15.5 per litre from Rs 8.5 per litre, while the levy on ATF exports has been raised to Rs 14.5 per litre from Rs 7.5 per litre.


Also read: India refiners reap fuel export windfall as war drives shortages

The windfall tax revision comes amid heightened volatility in global oil markets.

Brent crude climbed nearly 2% to a one-month high of $84.73 per barrel on Wednesday earlier after the US reinstated a naval blockade on Iran, raising concerns over oil supplies through the Strait of Hormuz, a key route that handled around 20% of global oil flows before the conflict.

Prices were also supported by renewed geopolitical tensions and attacks on oil tankers, although concerns over inflation and slowing global demand capped further gains. Higher diesel refining margins, driven by supply disruptions including lower Russian exports, have also kept fuel markets under pressure.

Centre curbed bulk fuel purchases through retail outlets, later lifted

The Centre had, on June 11, barred industrial, commercial and institutional consumers from purchasing petrol and diesel from retail fuel stations, directing them to source supplies through bulk procurement channels. The temporary order was issued to ensure equitable availability of fuel, prevent hoarding and diversion, and maintain uninterrupted supplies for retail consumers.

The government cited the prevailing geopolitical situation affecting global petroleum supply chains and shipping logistics, saying disruptions had increased the risk of supply imbalances. Authorities had also observed unusually high diesel and petrol sales at retail outlets as bulk consumers shifted purchases from dedicated supply channels to retail pumps due to a widening price gap.

At the time, retail diesel in Delhi was priced at Rs 95.20 per litre, while bulk buyers were paying Rs 134.50 per litre. The gap emerged after state-run oil marketing companies moderated retail fuel prices to shield ordinary consumers from higher costs arising from the West Asia conflict, even as bulk consumers continued to pay market-linked rates.

Under the order, diesel sales at retail outlets were restricted to vehicle fuel tanks or Petroleum and Explosives Safety Organisation (PESO)-approved containers, with purchases capped at 200 litres per customer or vehicle per day. The restrictions can remain in force for up to 90 days and may be extended through a fresh government order, while violations are punishable under the Essential Commodities Act.

The curbs were later lifted on Juny 29, with effect from July 1.