The Government of India has significantly increased export duties on diesel and aviation turbine fuel (ATF) in a move aimed at curbing windfall gains by private refiners and ensuring adequate domestic supply.
According to an official notification issued by the Ministry of Finance, export duties on diesel have been raised from ₹21.50 per litre to ₹55.50 per litre. Similarly, duties on ATF have increased from ₹29.50 per litre to ₹42 per litre. The revised rates have come into effect immediately.
Why the Government Increased Export Duties
The decision comes amid rising global oil prices, which have made exports more profitable than domestic sales. As a result, several private refiners shifted focus towards international markets, limiting domestic supply.
The government aims to address this imbalance and prioritise fuel availability within India. By increasing export duties, authorities intend to discourage excessive exports and ensure that domestic demand is adequately met.
Impact on Domestic Fuel Supply
Public sector oil marketing companies, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), dominate nearly 90% of India’s fuel retail market.
These companies have been facing significant losses due to frozen retail fuel prices, even as international crude prices surged. Reports indicate under-recoveries of over ₹100 per litre on diesel, making domestic sales less viable.
In contrast, private refiners capitalised on higher global prices by increasing exports, creating supply imbalances in the domestic market.
Steps Taken by Private Retailers
To manage losses, some private fuel retailers adopted measures such as:
- Slightly increasing fuel prices at retail outlets
- Limiting fuel sales per customer
- Prioritising exports over domestic distribution
These practices contributed to reduced fuel availability in certain regions.
ATF Price Surge and Airline Impact
Aviation turbine fuel prices also witnessed sharp fluctuations. Initially, oil companies raised ATF prices by over 100% for domestic and international airlines. However, prices were later moderated to prevent a steep rise in airfares.
The revised export duty on ATF is expected to stabilise supply and reduce volatility in aviation fuel pricing.
Government’s Objective
The policy aims to strike a balance between profitability and public interest by:
- Ensuring sufficient domestic fuel supply
- Reducing excessive export-driven gains
- Protecting consumers from price shocks
Officials emphasised that the decision was necessary given current global market conditions and evolving energy dynamics.
