The Indian government has revised the windfall tax on exports of diesel and aviation turbine fuel (ATF) effective from June 16, increasing the levies while keeping the tax on petrol exports unchanged. According to a notification from the finance ministry, the special additional excise duty (SAED) on diesel exports has been raised to Rs 14 per litre from the previous Rs 13.5 per litre. Similarly, the duty on ATF exports has been hiked to Rs 12.5 per litre from Rs 9.5 per litre. The export duty on petrol remains steady at Rs 1.5 per litre.
Policy Rationale and Domestic Focus
This move aligns with the government's objective to discourage refiners from prioritizing overseas sales and to ensure sufficient domestic fuel availability. The adjustment comes amid a fragile geopolitical situation in West Asia, despite a nascent breakthrough in the US-Iran deal. The windfall tax was originally introduced to maintain adequate domestic fuel supplies during disruptions caused by the West Asian conflict.
Impact on Exporters and Domestic Market
The levy aims to prevent exporters from excessively profiting from elevated international fuel prices triggered by the conflict and subsequent crude oil price surges. By making exports less attractive, the government seeks to safeguard domestic petroleum product supplies during the ongoing crisis. The government first imposed export duties on diesel and ATF in March and has revised them multiple times in response to global energy market fluctuations.
The existing duty rates on petrol and diesel sold in the domestic market remain unchanged. This policy underscores the Centre's commitment to stabilizing the domestic fuel market amid volatile international conditions.
