Centre Hikes Diesel, Aviation Turbine Fuel Export Duties, Removes Petrol Levy

The Centre on Saturday (October 31) increased windfall gains tax on diesel and aviation turbine fuel (ATF) exports while removing the levy on petrol shipments, as India seeks to balance domestic energy security with the commercial interests of its petroleum refining industry amid continuing geopolitical uncertainty in West Asia.

Under the revised rates, effective October 31 for the fortnight, diesel export duty has increased to ₹11.50 per litre from ₹8.50, while ATF duty has risen to ₹11 from ₹10.50. The levy on petrol exports has been reduced to zero from ₹2.50 per litre. Domestic petrol and diesel duty rates remain unchanged.

Introduced on March 27 for diesel and ATF, the export levies were extended to petrol from May 16, with fortnightly revisions aimed at maintaining domestic fuel availability amid international market volatility.

For ordinary Indian consumers, the revision is unlikely to bring immediate relief in petrol and diesel prices, as domestic duty rates remain unchanged. However, higher export duties could encourage refiners to divert some diesel and ATF supplies towards the domestic market, potentially supporting availability. Diesel is widely used by trucks, buses, agricultural machinery and industries, making its availability important for transportation, food distribution and the prices of essential commodities. Similarly, ATF costs influence airline operating expenses and can indirectly affect airfares.

The revision comes as India's diesel exports reached a 13-month high. Preliminary Kpler data showed shipments averaging 0.71 million barrels per day (bpd) during October 1–29, up 19.6% from September and 8.1% year-on-year. Reliance Industries accounted for nearly 78% of exports, shipping approximately 0.55 million bpd. Its export-oriented Jamnagar SEZ refinery, however, enjoys an exemption from the applicable levies.

India has an installed refining capacity of 258.1 million tonnes annually, with domestic petroleum consumption of 243.2 million tonnes and exports of 61.5 million tonnes in FY2025-26. Despite its refining strength, crude import dependence reached 88.3% during April-July 2026, when the crude import bill surged to $63.4 billion. The net oil and gas import bill rose 43.4% to $57.8 billion.

With around 40% of crude, 60% of LNG and 90% of LPG imports routed through the Strait of Hormuz, geopolitical disruptions pose risks to India's energy supplies. The government's latest move seeks to maintain domestic fuel availability, although its impact on household expenses will ultimately depend on international crude prices, domestic fuel pricing decisions and refiners' response to the revised duties.