1 October 2026 (Navroze Bureau) The government has reduced the windfall tax, or export levy, on diesel and aviation turbine fuel (ATF) exports with effect from October 1, 2026, while keeping the levy on petrol exports unchanged. The latest revision comes as the government continues to adjust petroleum product export duties in response to movements in international crude oil and fuel prices.
According to the revised rates, the export duty on diesel has been reduced to Rs 16 per litre, while the levy on aviation turbine fuel has been lowered to Rs 10.50 per litre. The government has retained the existing export duty on petrol.
The changes were announced through a government order issued on September 30 and will apply from October 1. The export levies are reviewed periodically, with the rates generally linked to changes in international crude and petroleum product prices.
The windfall tax mechanism was introduced as the government sought to capture extraordinary gains from fuel exports during periods of elevated international energy prices. The levy is imposed on selected petroleum products exported from India and is separate from the taxes applicable to fuel sold in the domestic market.
The latest reduction is significant for Indian refiners and fuel exporters because lower export levies can reduce the tax burden on shipments to overseas markets. Indian refiners have a large refining capacity and export petroleum products to several international destinations. Changes in export taxes can therefore affect refining economics, margins and the attractiveness of overseas sales.
Diesel remains one of the most important products in India’s refining and export basket, while ATF is a key product for the aviation sector. Refiners manufacture these products as part of their overall refining operations, and export opportunities can vary depending on domestic demand, international prices and regulatory restrictions.
The government has been changing the export levies several times during 2026 as global energy markets have experienced significant volatility. Earlier in the year, export duties on diesel and ATF were substantially higher amid concerns over crude oil supplies and disruptions linked to the West Asia conflict.
In April, the government had raised the export levy on diesel to Rs 55.50 per litre and on ATF to Rs 42 per litre. The objective at the time was to encourage adequate domestic availability of petroleum products amid an abnormal rise in international crude prices.
The rates were subsequently reduced as market conditions changed. By May, the government had lowered the diesel export levy to Rs 16.50 per litre and the ATF levy to Rs 16 per litre, while imposing a Rs 3-per-litre duty on petrol exports.
The government then reduced the rates further for the fortnight beginning June 1. At that time, the export levy was set at Rs 13.50 per litre for diesel, Rs 9.50 per litre for ATF and Rs 1.50 per litre for petrol.
The latest revision demonstrates the government’s continued use of flexible export taxation as global oil and refined fuel markets evolve. The rates can influence the economics of exporting petroleum products and are therefore closely monitored by oil marketing companies, refiners and investors.
The decision also comes against the backdrop of continuing uncertainty in global energy markets. Geopolitical tensions in the Middle East, disruptions to crude supply routes and changing demand patterns have contributed to volatility in international oil prices. Indian refiners have also been adjusting their crude sourcing strategies in response to changes in global supply.
India is one of the world’s major crude oil importers, but it has a substantial refining industry that allows the country to process crude into petrol, diesel, ATF and other petroleum products. Some of these refined products are consumed domestically, while others are exported depending on market conditions.
The distinction between export duties and domestic fuel taxes is important for consumers. The latest move concerns petroleum products shipped outside India and does not directly change the retail tax structure for petrol and diesel sold at domestic fuel stations.
The government has previously clarified that revisions to export levies do not automatically translate into changes in domestic petrol and diesel prices. Retail fuel prices are determined by oil marketing companies and are influenced by international crude prices, currency movements, taxation, refining costs and other market factors.
For refiners, however, the lower export levy can affect the relative profitability of selling diesel and ATF in international markets. The impact will depend on global fuel prices, refinery margins, freight costs and demand in overseas markets.
The reduction also reflects the government’s effort to balance two objectives: ensuring adequate domestic supplies while allowing Indian refiners to remain competitive in international markets. During periods of supply stress, higher export levies can discourage exports and support domestic availability. When market conditions ease, lower levies can provide greater flexibility to refiners.
Petrol export duty has been kept unchanged under the latest notification. This means there will be no additional reduction in the levy applicable to petrol exports as part of the October 1 revision.
Market participants will continue to monitor future government reviews of the export levies, particularly as global crude prices remain sensitive to geopolitical developments. Any significant change in international energy prices could influence the next revision of India’s petroleum export taxes.
For consumers, the immediate impact is limited because the announcement concerns export levies rather than a direct change in domestic retail fuel taxation. For refiners and exporters, however, the reduction in duties on diesel and ATF provides a change in the cost structure for overseas sales from October 1.
The latest decision therefore forms part of India’s broader strategy of periodically adjusting petroleum export levies according to global market conditions, domestic supply considerations and the economics of the country’s refining sector.