The central government has reduced export duties on petrol, diesel and aviation turbine fuel (ATF), with the revised rates set to come into effect from June 1, according to a notification issued by the Finance Ministry. The government clarified that the changes will apply only to fuel exports and will not have any direct impact on domestic petrol and diesel prices or on existing excise duty rates applicable in the domestic market.
The decision comes amid continued fluctuations in global crude oil and refined petroleum product prices. The government said the revision in export duties was made after considering international prices, refining margins and the domestic supply balance.
Under the revised structure, export duty on petrol has been fixed at Rs 1.5 per litre. Export duty on diesel has been set at Rs 13.5 per litre, while export duty on aviation turbine fuel has been fixed at Rs 9.5 per litre.
The revised duty structure is aimed at aligning taxation with prevailing global market conditions while ensuring that Indian refiners remain competitive and domestic energy security is not affected.
The government stated that the reduction in export duties will not lead to any immediate change in fuel prices for domestic consumers. No changes have been made to the central excise duty applicable on petrol and diesel sold within the country.
As a result, consumers, transport operators, industries and other domestic users will continue to purchase fuel at prevailing retail prices. Export duties apply only to petroleum products sold by Indian companies in overseas markets.
The government conducts periodic reviews of export duties applicable on petroleum products. International prices of crude oil, petrol, diesel and ATF are generally reviewed every 15 days, following which decisions are taken on whether to increase or reduce duty rates.
The review mechanism is intended to keep India’s tax policy flexible in line with developments in the global energy market while maintaining a balance between domestic supply requirements and exports.
Prior to the latest announcement, state-run oil marketing companies had increased retail fuel prices on May 25. Petrol prices were raised by Rs 2.61 per litre, while diesel prices increased by Rs 2.71 per litre.
Following the revision, petrol prices in New Delhi rose to Rs 102.12 per litre and diesel prices reached Rs 95.20 per litre. The current reduction in export duties, however, has no direct linkage with these retail fuel prices.
Earlier in March, the central government had reduced the Special Additional Excise Duty on petrol and diesel in an effort to maintain price stability in the domestic market.
Under that decision, the Special Additional Excise Duty on petrol was reduced from Rs 13 per litre to Rs 3 per litre. The corresponding duty on diesel was cut from Rs 10 per litre to zero.
The move had resulted in a reduction in the overall central excise duty burden on petrol and diesel as the government sought to contain domestic fuel prices despite higher global crude oil prices.
Export duty is a tax imposed by the government on goods shipped outside the country. The primary objective of such duties is to ensure adequate domestic supply and help manage prices of essential commodities in the local market.
In the energy sector, export duties are considered significant because global demand and prices for petroleum products remain volatile. When international prices rise sharply, the government may increase export duties to maintain domestic availability. Conversely, duties may be reduced during periods of weaker prices to support exporters and refiners in international markets.
Aviation turbine fuel is the primary fuel used in the aviation industry and is a kerosene-based fuel designed for aircraft turbine engines.
Demand for ATF has been increasing alongside growth in global aviation activity. Taxation and export policies related to ATF have implications for the airline industry, air travel costs and the broader energy trade.
Industry experts said the reduction in export duties could provide Indian refiners with improved opportunities in overseas markets. The measure may also support export competitiveness and encourage investment in the energy sector.
The government’s periodic review framework is intended to maintain a balance between domestic market requirements and global trade interests. Future revisions in duty rates will depend on movements in international crude oil prices in the coming weeks.
