NEW DELHI: The government on Saturday significantly increased export duties on diesel and aviation turbine fuel to discourage oil refiners from exporting these fuels and to ensure their adequate availability in the domestic market amid ongoing tensions in West Asia. The Finance Ministry has issued a series of notifications raising export duty on diesel by more than 150% – from Rs 21.5 per liter to Rs 55.5 per litre – with immediate effect. The tax on ATF, or jet fuel, has been increased from Rs 29.5 per liter to Rs 42 per litre. Export duties on gasoline are still non-existent. Under the revised structure, the special excise surcharge on high-speed diesel has been raised to Rs 24 per litre, while the road and infrastructure tax is now Rs 36 per litre, meaning a major chunk will now flow to the Centre. The government said that these fees are not intended to increase revenues, but rather to prevent fuel exporters from unjustifiably benefiting from price differences. The Centre, on March 27, had imposed export duties of Rs 21.5 per liter on diesel and Rs 29.5 per liter on ATF in a bid to check the windfall, as there was a shortage of fuel supply in international markets due to pressure on energy supply amid the military conflict and export restrictions imposed by China.
It also reduced customs duties on diesel and gasoline to protect consumers and oil companies from the impact of rising crude oil prices. Retail motor fuel prices in India did not rise despite extreme volatility in the international crude oil market, while only a small portion of international price pressure was transmitted to domestic flights. The unexpected tax on diesel exports and ATF helps the Center partially offset the impact of the tariff cut. On March 27, the government estimated revenue gains from export duties at around Rs 1,500 crore in two weeks. A further rise in export duties is likely to increase revenue gains. The Ministry of Petroleum said in a statement: “At a time when global diesel prices have risen sharply, the tax is designed to discourage exports and ensure that refinery production is first directed towards meeting domestic demand.
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