In an effort to reduce exports and prioritize domestic fuel supplies in the face of a severe global oil shock, the Center imposed an export tax of Rs 21.5 per litre on diesel and Rs 29.5 per litre on aviation turbine fuel (ATF). Every two weeks, the action will bring in almost Rs 1,500 crore for the government.
The rate of special extra excise duty (SAED) went into effect on March 26. ATF is the most affected segment under the new export duty structure since it was included within the SAED framework with a statutory levy of about Rs 50 per litre, which has been effectively cut to Rs 29.5 per litre post exemptions.
But unlike previous stages, upstream producers like ONGC have not been subject to a windfall tax, indicating a calibrated strategy centered on export and refining economics rather than crude output. India exported 14 million tonnes of gasoline and 23.6 million tonnes of gasoil between April 2025 and January 2026, demonstrating the importance of refined fuel exports to refinery profits and foreign exchange inflows.
With an installed refining capacity of 258 million tonnes annually, India is the world’s fourth-largest oil refiner and the seventh-largest exporter of petroleum products. The nation exported 65.1 million tonnes of petroleum products worth $44.4 billion in FY25, demonstrating the size of the export-linked refining environment that the levy is currently affecting.
Diesel export duty has been reinstated at its greatest effective level in the current cycle, Rs 21.5/litre, after fluctuating between Rs 0.5 and Rs 13/litre during 2022–2023 before being virtually eliminated. In keeping with the updated framework, the ATF export duty has also been significantly increased. Previously, it was between Rs 6 and Rs 9 per litre.
Concerns about refiners’ margin constriction were reflected in the markets’ strong reaction to the regulation change. Reliance Industries, which operates the largest refining plant in the world at Jamnagar and is India’s biggest fuel exporter, saw its shares drop 4.55% to Rs 1,348.25, the biggest single-day decrease since June 2024. The stock’s market capitalization dropped by Rs 87,014 cr to Rs 18.25 lakh crore when it reached an intraday low of Rs 1,345.
