Why Has India Slashed Fuel Export Levies? Petrol, Diesel And ATF Duties Lowered From June 1

In view of softening international oil prices and easing fuel supply, the Indian government has cut export duty rates of petrol, diesel and aviation turbine fuel (ATF) from June 1, 2023. The duty cut is expected to help Indian refiners export oil more cheaply and secure domestic supplies of fuel. This comes two months after the government raised the duties to curb exports, in view of the West Asia conflict and energy security fears.

Fuel Products Export Duty Rates Reduced

Export duty on petrol has been reduced from Rs 3 a litre to Rs 1.5 a litre. The finance ministry said on Saturday that the notification was issued. Besides, the export duty on diesel was cut down from Rs 16.5 to Rs 13.5 per litre, and the duty on ATF exports was cut drastically from Rs 16 to Rs 9.5 per litre.

These rates are for the two-week period starting June 1, and these would be further amended as part of the government’s fortnightly fuel duty regime.

Why Is The Government Reducing The Duty?

The export duties on petroleum products were periodically reviewed by the government on a fortnightly basis with linkage to the average international price of crude, petrol, diesel and ATF in a given period.

This recent reduction reflects that global energy prices have softened compared to when the government imposed higher rates of duty. In line with this reduction in energy prices, the government has lowered the tax burden for exporters.

The move aims to balance the need to protect local fuel supplies with the need to allow refiners to take advantage of export opportunities when world market conditions are favourable.

Introduced During The West Asia Crisis

The government had imposed Special Additional Excise Duty (SAED) and Road and Infrastructure Cess (RIC) on exports of petrol, diesel and ATF from March 27, 2026. 

The development comes in the backdrop of rising crude oil prices, fears of political turmoil in West Asian countries and a looming fuel supply crunch. The government wanted to make exports less profitable so that the domestic market has enough supplies of fuel in a time of extreme uncertainty.

How Is It Different In The New Structure?

Under the new regime, the entire levy on the export of petrol, diesel and ATF will be collected as Special Additional Excise Duty (SAED).

Petrol export duty: 1.5/litre
Duty on diesel exports: ₹13.5 a litre
ATF export duty: Rs 9.5/litre

In the latest revision, these products will not attract any Road and Infrastructure Cess.

What It Means For Oil Refiners

The cut in export duties is likely to boost margins for Indian refiners with big overseas sales. Lower levies improve net realisation from exports, making international markets more lucrative for fuel shipments.

For companies with large export exposure, the impact of high profitability is favourable and particularly positive if refining margins continue to be supportive globally. The government’s twice-yearly review process will also enable authorities to review duties again quickly if volatility returns to global energy markets.

Will This Have Any Effect On Local Fuel Taxes?

The government has cut the export duty on petroleum products, but excise duty rates on petrol and diesel sold in the domestic market have not been changed. That means the newest revision is unlikely to have a direct impact on the price consumers pay for fuel.

The move is mostly about making exports more economical for refiners after a cooling in global fuel prices. It is about a policy adjustment vis-a-vis global energy market trends and not about domestic fuel taxation.

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