Petrol Export Tax Jumps Fivefold, Diesel Levy Slashed as West Asia Crisis Rattles Fuel Markets

The government has raised the windfall tax on petrol exports fivefold while cutting the levy on diesel shipments abroad by nearly half, recalibrating its fuel export policy amid continuing uncertainty over global energy supplies and tensions in West Asia.

Under the revised rates effective October 16, the Special Additional Excise Duty (SAED), along with the road and infrastructure cess, on diesel exports has been reduced to ₹8.50 per litre from ₹16 per litre. In contrast, the levy on petrol exports has increased to ₹2.50 per litre from ₹0.50 per litre. The export duty on aviation turbine fuel (ATF) remains unchanged at ₹10.50 per litre.

The revised rates apply for the fortnight beginning October 16, with the next review expected to determine whether the levies need further adjustment. The Finance Ministry's notification does not provide a specific explanation for the contrasting changes in petrol and diesel duties.

The policy comes against the backdrop of escalating tensions in West Asia, which have heightened concerns over crude oil prices, energy supplies and the cost of securing fuel. India introduced export duties on diesel and ATF on March 27, 2026, and extended the levy to petrol exports from May 16.

The government's stated objective is to protect domestic fuel availability and prevent exporters from benefiting excessively from differences between domestic and international prices. Export duties can make overseas sales less attractive when global prices rise sharply, potentially encouraging refiners to prioritise the domestic market.

The latest move, however, does not automatically mean that more fuel will remain in India or that pump prices will change. The impact will depend on global prices, refinery margins, domestic demand and exporters' commercial decisions.

Importantly, duties on petrol and diesel sold for domestic consumption remain unchanged. The announcement therefore does not, by itself, signal an immediate increase or reduction in retail fuel prices.