India has reduced windfall taxes on exports of petrol, diesel and aviation turbine fuel (ATF), in a move that could provide some relief to refiners and exporters across South Asia’s energy market.
The revised levies took effect on Saturday, according to a government order. The export duty on diesel has been lowered to 24 Indian rupees ($0.2515) per litre from 25.5 rupees, while the levy on petrol has been scrapped entirely, falling to zero from 3.5 rupees per litre.
The government also reduced the windfall tax on aviation turbine fuel to 19.5 rupees per litre from 22 rupees. According to Reuters, the changes form part of India’s fortnightly review of export levies, which are adjusted in response to movements in international crude oil and refined petroleum product prices.
The latest reduction comes amid continued volatility in global energy markets, with oil prices remaining sensitive to geopolitical tensions and disruptions surrounding the Middle East. India, one of Asia’s major refining hubs, has increasingly adjusted export duties to balance overseas sales with domestic fuel availability.
India initially introduced windfall taxes in July 2022 to capture exceptional profits earned by oil producers and refiners as global crude prices surged. The government abolished the levies in 2024, but reinstated them in March 2026 after oil prices climbed sharply amid the US-Israeli war on Iran.
The policy has since become a key tool for New Delhi to respond to changes in global petroleum markets. Export levies have been revised every two weeks, allowing the government to raise or lower taxes as international prices and domestic supply conditions change.
The latest move also comes as India's fuel demand remains relatively strong. Reuters reported earlier this month that India's fuel consumption rose about 3% in July from the previous month to 19.92 million metric tons, its highest level since March.
For regional energy markets, the lower export duties could increase the competitiveness of Indian-refined petroleum products in Asian markets, particularly as refiners assess margins and demand amid continuing uncertainty over global oil supplies.
BOB Post
