The Indian government has changed the windfall tax regime on petroleum exports amid the West Asia crisis and increased prices of crude oil. The central government imposed a Special Additional Excise Duty (SAED) of Rs. 3 per litre on petrol exports with a corresponding cut in export duty on diesel and aviation turbine fuel (ATF).
According to official gazette notifications issued by the Ministry of Finance, the SAED on diesel exports has been cut down from Rs. 23 per litre to Rs. 16.50 per litre. Likewise, ATF export duty was reduced from Rs. 33 per litre to Rs. 16 per litre. The new rates will took effect from May 16.
The excise duty on petrol and diesel used in the domestic market has not changed. The notification said that the road and infrastructure cess on petrol and diesel exports will continue to be zero.
The latest revision follows as global crude oil prices continue to trade above $100 per barrel following the escalation in the West Asia conflict. Brent crude recently crossed $111 per barrel, much higher than the $73 per barrel before the conflict escalated.
“The windfall tax was to ensure domestic availability of petroleum products by disincentivising exports in the backdrop of the West Asia crises,” the ministry said.
It is the first time since the start of the current West Asia conflict that export duty has been put into effect on petrol. The analysts believe that the step towards preventing excessive exports while maintaining adequate supply at home amid global uncertainty.
The government has revised windfall taxes several times in recent months due to the volatile crude oil prices. As per the notification, on March 26, India introduced an export duty of Rs. 21.50/ litre on diesel and Rs. 29.50/ litre on ATF. These duties were hiked further in April to Rs. 55.50 and Rs. 42 per litre respectively, before being cut back again earlier this month.
On Friday, May 15 and a few days after the five-state election, the government increased petrol and diesel prices by Rs. 3 per litre for the first time in more than four years. The petrol and diesel prices were increased amid surging global crude prices, following the Iran war.
After the revised petrol and diesel prices, petrol prices in the national capital jumped to Rs. 97.77 a litre from Rs. 94.77 and diesel to Rs. 90.67 per litre after the revision.
Also Read: CNG Prices Rise in Delhi as Fuel Costs Climb Amid West Asia Crisis
The prices of CNG have also risen. It increased by Rs. 2 per kg recently in Delhi, by Rs. 2 per kg in Mumbai, and by another Rs. 1 per kg in Delhi within 48 hours.
Experts believe that continued geopolitical uncertainty combined with high oil prices may be enough to keep markets volatile in the short term, thereby causing inflationary pressures across transport, logistics and aviation.