The Indian government has announced a reduction in export duties on petrol,diesel,and aviation turbine fuel (ATF), effective June 1,2023. This decision comes as international oil prices soften and fuel supply concerns ease, allowing refiners to export fuel at more competitive rates while ensuring adequate domestic supply.
Export duties on petrol will decrease from ₹3 per litre to ₹1.5, while diesel duties will drop from ₹16.5 to ₹13.5 per litre. The ATF export duty will see a significant cut from ₹16 to ₹9.5 per litre. The finance ministry issued notification on Saturday,indicating that these rates will be reviewed every two weeks as part of the government’s ongoing assessment of fuel duties.
This adjustment follows a period of heightened export duties imposed in March 2023,aimed at curbing exports amid rising crude oil prices and geopolitical tensions in West Asia. The government had sought to protect domestic fuel supplies during a time of uncertainty by making exports less attractive. Now, with a decline in global energy prices, authorities have opted to relieve exporters of some of their tax burden.
Under the revised framework, all levies on petrol, diesel, and ATF exports will be categorized as Special Additional Excise Duty (SAED), eliminating the previously applied Road and Infrastructure Cess . This shift is expected to enhance profit margins for Indian refiners engaged in international sales, as lower duties will improve net realizations from exports.
For companies heavily reliant on exports,the duty reduction is particularly beneficial if refining margins remain favorable in the global market . The government’s biannual review process allows for swift adjustments to duties should market volatility return, ensuring that the domestic market remains stable .
Despite these changes in export duties, domestic excise rates on petrol and diesel sold in India will remain unchanged. Consequently, consumers are not likely to see an immediate impact on fuel prices at the pump. The focus of this policy shift is primarily on enhancing export competitiveness in response to cooling of global fuel prices rather than altering domestic fuel taxation.
This latest move reflects the Indian government’s strategy to balance the needs of local fuel supply with the opportunities presented by international markets. As the global energy landscape evolves, the government aims to position Indian refiners to capitalize on favorable conditions while safeguarding domestic interests.
