Government sharply raises export duty on diesel and aviation fuel

The Central Government has increased export duty on diesel and Aviation Turbine Fuel (ATF), making overseas shipment of these fuels more expensive. The revised rates came into effect immediately after the Finance Ministry issued an official notification on Saturday.

According to the new order, export duty on diesel has been raised from Rs 21.5 per litre to Rs 55.5 per litre. Export duty on ATF, which is used as aircraft fuel, has been increased from Rs 29.5 per litre to Rs 42 per litre. However, export duty on petrol remains unchanged at zero.

The move comes at a time when global crude oil markets remain under pressure due to conflict in West Asia. Rising oil prices and supply concerns have affected fuel markets around the world, prompting India to take steps aimed at protecting domestic supply and controlling price pressures.

Officials said the increase in export duty is meant to ensure that enough fuel remains available in the country and to prevent exporters from earning unusually high profits because of higher international prices.

India is one of the world’s major refining centres, and many private as well as public sector companies export refined petroleum products to different countries. When global prices rise sharply, refiners may find exports more profitable than selling in the domestic market. In such situations, the government sometimes imposes or increases export duty.

Why the duty was increased

The government had earlier imposed export duty on March 26. At that time, diesel exports were taxed at Rs 21.5 per litre, while ATF exports faced a duty of Rs 29.5 per litre.

Now, with crude oil prices rising further, the government has chosen to raise these rates sharply.

The main reason behind such a step is to improve domestic availability. Diesel is one of the most important fuels in India. It is widely used in trucks, buses, trains, farming equipment, generators, and industries. Any shortage or sharp rise in diesel prices can affect transport costs and increase inflation.

ATF is equally important because it directly affects airlines and air travel costs. If aviation fuel becomes scarce or too expensive, airlines may face higher operating expenses.

By increasing export duty, the government can make exports less attractive and encourage companies to sell more fuel inside India.

Another reason is to reduce windfall gains. When international prices jump suddenly, refiners can make higher profits by exporting fuel. Export duty helps the government capture part of that extra gain while balancing domestic needs.

The decision also reflects concern over global supply uncertainty caused by geopolitical tensions.

ALSO READ: Putin announces 32-hour ceasefire in Russia-Ukraine war for Orthodox Easter

ALSO READ: Pakistan assures full security for US delegation ahead of Iran talks in Islamabad

Impact on markets and consumers

The new export duty may have several effects on fuel companies, airlines, and consumers.

For oil refiners, higher duty means exporting diesel and ATF may become less profitable. Some companies could divert more fuel to domestic markets instead of sending it abroad.

For the aviation sector, the direct impact may be limited because the duty applies to exports of ATF, not fuel sold within India. However, global oil volatility still influences aviation fuel prices, which can affect airline ticket costs over time.

For common consumers, the move may help maintain local fuel supply and reduce the risk of sudden shortages. If enough diesel remains available domestically, transport and logistics costs may remain more stable.

Diesel prices are closely linked to everyday life. Higher transport costs can increase prices of vegetables, grains, packaged goods, and construction materials. That is why governments closely watch diesel supply and pricing.

Experts say such export duties are often temporary and depend on market conditions. If global crude prices fall or supply improves, the government may later reduce or remove these duties.

India has used similar windfall taxes in the past when crude prices surged sharply. These taxes are adjusted from time to time depending on international oil prices, refining margins, and domestic requirements.

The broader concern remains instability in West Asia, one of the most important oil-producing regions in the world. Any conflict in that region can disrupt shipping routes, reduce output, and push prices higher.

India imports a large share of its crude oil needs, so developments in international markets have a direct impact on the economy.

For now, the government appears focused on ensuring energy security, protecting consumers, and keeping enough fuel available at home.

The sharp rise in export duty on diesel and ATF sends a clear message that domestic supply will remain the priority during uncertain global conditions. Further policy changes may depend on how oil prices move in the coming weeks.