India Reduces Windfall Tax on Diesel, Petrol, and Jet Fuel Exports

India has reduced its windfall profit tax on the export of petroleum products, with the changes taking effect Saturday. The move, announced in a government order on Friday, lowers the export levy on diesel and aviation turbine fuel and eliminates it for petrol.

Details of the Tax Adjustment

The government has revised the special additional excise duties for fuel exporters. The changes are as follows:

• Diesel: The export duty was lowered to 24 Indian rupees ($0.25) per litre, down from 25.5 rupees.
• Petrol: The export tax was cut to zero from 3.5 rupees per litre.
• Aviation Turbine Fuel (ATF): The levy was reduced to 19.5 rupees per litre from 22 rupees.

Context and Background

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India first imposed the windfall tax in July 2022 to tax the significant profits energy companies were making from high global oil prices. These levies are typically reviewed every two weeks and adjusted based on international crude prices and the refining margins of domestic producers.

The tax was initially removed after two years but was reinstated in March 2026 following a surge in oil prices linked to geopolitical tensions. The latest reduction suggests a moderation in the profit margins that prompted the previous tax hike, providing relief to Indian refiners that export fuel.

Implications for Refiners

A reduction in export taxes is generally positive for Indian refining companies, particularly major exporters. Lowering the levy improves their export margins, potentially making their products more competitive in the international market and encouraging higher refinery output.