The central government has slashed export duty on petrol to zero, while also reducing levies on diesel and aviation turbine fuel (ATF), aiming to ensure steady domestic supply amid rising global oil prices. Here’s what has shifted and what it means for India’s fuel sector and consumers.
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## Key Changes in Export and Domestic Duties
– Export duty on **petrol** has been brought down to **nil**.
– **Diesel** exports now attract a duty of **Rs 13.50 per litre** (SAED component).
– The export duty on **ATF** has been lowered to **Rs 9.50 per litre**.
These revised export duties arise from government notifications effective **June 1, 2026**, as part of the fortnightly review mechanism.
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## Reason Behind the Move
India’s fuel policy adjustments follow rising international crude prices—jumping from roughly **USD 70 to USD 122 per barrel** in just over a month—amid supply disruptions triggered by tensions in West Asia.
To prevent exporters from draining domestic fuel stocks in pursuit of profitable international sales, the government introduced export levies on diesel and ATF starting **March 27, 2026**. Petrol exports were initially duty-free based on crack margins.
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## Domestic Levies and Consumer Impact
– Special Additional Excise Duty (SAED) on petrol sold in India has been reduced from **Rs 13 to Rs 3 per litre**.
– Diesel’s domestic SAED has been removed entirely (falls to **nil**).
Despite these reductions, **pump prices for petrol and diesel will remain unchanged**. Instead, these cuts will lower the financial burden—called *under-recoveries*—incurred by public sector oil marketing companies (OMCs) like Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation when selling fuel below cost.
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## Policy Goals and Oversight
Authorities are using several tools to manage domestic supply and maintain stability:
– **Export duties** introduced via SAED and Road & Infrastructure Cess (RIC).
– **Allocations required**: refiners must supply **50% of petrol** and **30% of diesel** they plan to export to the domestic market.
– **Review cycle**: export levies are revised every fortnight, tying them to international price trends.
Government officials say these steps are necessary during ongoing global volatility and supply chain disruptions. India’s crude inventories are reportedly adequate for over two months, and domestic LPG and PNG supplies are comfortable.
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## What This Means for Consumers and the Economy
– Consumers won’t see relief at the pump right now since retail prices are being held steady. The adjustments are meant to protect them from potential price surges by allowing the government and OMCs to absorb losses.
– For OMCs, reduced under-recoveries mean less financial stress amid sharp international price hikes. Diesel’s under-recovery, for instance, was previously assessed at around **Rs 81.90 per litre**, and petrol around **Rs 26 per litre** under current product price levels.
– The duty reforms cost the exchequer **an estimated Rs 1.70 lakh crore** if these rates hold for the full financial year. However, export levies are expected to recoup a portion of that over shorter periods.
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These adjustments reflect a balancing act between global pressures and domestic responsibilities. While pumps won’t get cheaper immediately, these policy moves aim to shield both consumers and fuel suppliers from more damaging price swings.
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