The Centre has slapped an export tax of Rs 21.5 per litre on diesel and Rs 29.5 per litre on aviation turbine fuel (ATF), as it seeks to curb exports and prioritise domestic fuel availability amid a sharp global oil shock. The move will fetch the government about Rs 1,500 crore every fortnight.
The special additional excise duty (SAED) rate has become effective March 26. ATF has been brought under the SAED framework with a statutory levy of around Rs 50 per litre, which has been effectively reduced to Rs 29.5 per litre post exemptions, making it the most impacted segment under the revised export duty structure.
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Balancing the Barrel
However, unlike earlier phases, no windfall tax has been imposed on upstream producers such as ONGC, signalling a calibrated approach focused on refining and export economics rather than crude production. The latest measures come at a time when India’s exposure to global fuel markets remains significant. Between April 2025 and January 2026, India exported 14 million tonne of gasoline and 23.6 million tonne of gasoil, making refined fuel exports a key contributor to refinery earnings and foreign exchange inflows.
At a broader level, India is the fourth-largest oil refiner globally with an installed refining capacity of 258 million tonne per annum, and the seventh-largest exporter of petroleum products. In FY25, the country exported 65.1 million tonne of petroleum products worth $44.4 billion, underscoring the scale of the export-linked refining ecosystem now being impacted by the levy.
Data shows a sharp escalation in export taxes. Diesel export duty, which had fluctuated between Rs 0.5 and Rs 13 per litre during 2022-23 before being largely withdrawn, has now been reintroduced at Rs 21.5 per litre — its highest effective level in the current cycle. Similarly, ATF export duty, which earlier ranged between Rs 6 and Rs 9 per litre, has now been raised sharply in line with the revised framework.
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The official notification states that the revised rules “shall come into force with immediate effect” and clarifies that export-related provisions “shall not apply… other than those exported by Public Sector Oil Companies to Nepal, Bhutan, Bangladesh and Sri Lanka,” reinforcing the government’s intent to prioritise domestic availability over exports.
Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Chaturvedi said the primary objective of the export levy is to secure domestic supply in a volatile environment. “The move… is to prioritise domestic availability of diesel and ATF and ensure energy security for the country in the midst of global uncertainty which has been exacerbated by a disruption in supply chain,” he said, adding that the duties will be reviewed every fortnight. “The situation is dynamic… we are living in difficult times. Any (revenue) implication will have to factor in actual supply of goods coming into the country,” he said.
Finance Minister Nirmala Sitharaman said the excise cut is aimed at insulating consumers from price shocks. “In view of the West Asia crisis, the central excise duty on petrol and diesel… has been reduced by `10 per litre each. This will provide protection to consumers from a rise in prices,” she said, adding that export duties have been imposed to ensure adequate domestic availability.
Margin Compression
Analysts said the reimposition of export levies will directly impact refining margins. Harshraj Aggarwal, lead analyst at YES Securities, said export cess “acts as a direct deduction from export realisations,” adding that diesel and ATF levies will significantly reduce arbitrage opportunities. “The levy narrows the spread between export and domestic margins,” he said, warning of pressure on gross refining margins, particularly for export-oriented players such as Reliance Industries, Nayara Energy, MRPL and CPCL.
CareEdge Ratings Director Hardik Shah said the policy is aimed at stabilising supply while the government absorbs the fiscal impact. “Imposition of a cess on the export of diesel and ATF is expected to ensure adequate domestic availability… with the Government of India absorbing the excise duty cut,” he said.
Markets reacted sharply to the policy shift, reflecting concerns over margin compression for refiners. Shares of Reliance Industries (RIL), India’s largest fuel exporter and operator of the world’s largest refining complex at Jamnagar, fell 4.55% to Rs 1,348.25, marking their steepest single-day decline since June 2024. The stock hit an intraday low of Rs 1,345, wiping out Rs 87,014 crore in market capitalisation to Rs 18.25 lakh crore. A spokesperson for Reliance Industries did not immediately respond to queries on the impact of the export levy.
TOPICSexportsThis article was first uploaded on March twenty-eight, twenty twenty-six, at sixteen minutes past one in the night.