India Cuts Diesel and ATF Export Tax, Not Pump Prices

India has cut the windfall tax on diesel exports to ₹16 a litre from October 1. The levy on aviation turbine fuel falls to ₹10.5 a litre, and petrol stays at ₹0.50 a litre.

A Finance Ministry notification issued on September 30 left excise on petrol and diesel sold at home unchanged, so the revision does not move pump prices. It is the second straight fortnight of diesel and jet-fuel cuts, and it arrives while global diesel remains unusually tight.

Pump Prices Do Not Move With This Cut

The new charges apply only to product leaving India. Diesel exporters pay ₹4 a litre less than they did from September 16, when the levy sat at ₹20. ATF exporters pay ₹4.50 a litre less than the ₹15 rate that applied for the same stretch. Petrol does not move at all.

The ministry said existing duty rates on petrol and diesel cleared for domestic consumption are unchanged. That is the clause that keeps retail boards still. The original March package paired an export brake with a ₹10 a litre cut in central excise on petrol and diesel sold at home, which Finance Minister Nirmala Sitharaman said would protect consumers from a price spike during the West Asia crisis. This fortnight touches only the export side of that bargain.

THE OCTOBER 1 EXPORT LEVIES

The charges are special additional excise duty and, where it still applies, road and infrastructure cess. Each revision amends the March 26 parent order under the Central Excise Act, as in Notification No. 30/2026-Central Excise, which reset diesel in June in the same legal form. The September 30 order follows that pattern and holds for a fortnight from October 1.

A 10-Year High in Diesel Cracks

The cut would read as a simple lag to softer prices if middle-distillate margins had collapsed. They have not. LSEG pricing showed Asian 10-ppm diesel refining margins at a record of more than $87 a barrel on September 16, against about $22 a barrel before the conflict and a previous high of $85.60 at the end of March. United States diesel cracks hit $117.97 a barrel the same day.

SINGAPORE DIESEL CRACKS

• Asia record: More than $87 a barrel on September 16, per LSEG, the highest print of the war period.
• Pre-conflict base: About $22 a barrel, so the September 16 margin was roughly four times the old normal.
• Reliance’s quarter: The company’s table for the quarter ended June 30 showed Singapore gasoil cracks of $63 a barrel, up 299 percent from a year earlier, with jet and kerosene at $62.9, up 343 percent.
• October paper: Sparta Commodities said the October Singapore diesel crack had jumped $15 a barrel on the week to the highest level in at least 10 years, with Russia’s diesel export ban still running through October.

Reliance’s own note said middle-distillate cracks surged in April after the Middle East conflict broke out, eased in May and June, then settled at a higher floor. Abhisek Kumar, senior oil market analyst at Sparta Commodities, said Asia was no longer immune to the risk premium, and that fears around crude availability and Saudi supply disruption had started lifting Asian diesel. A formula tied to average international crude and product prices can still lower the rupee levy while the crack, the gap between product and crude, stays wide. The export brake eases either way.

Who Pays After the SEZ Carve-Out?

The levy does not fall evenly on every Indian barrel. Special Economic Zone refineries sit outside it, a position the Department of Revenue has confirmed on the record.

As per judicial pronouncements on this issue, the special additional excise duty and additional excise duty are not applicable on SEZ refineries

Jainendra Singh Kandhari, Joint Secretary, Tax Research Unit, Department of Revenue

That carve-out, described as not applicable on SEZ refineries in the April briefing, shapes the whole market. Reliance Industries runs two plants at Jamnagar, including an export-only complex inside an SEZ. Citi Research calculated that in the 2025 financial year, 75 percent of Reliance’s diesel and 35 percent of its jet fuel came from that SEZ unit. At the March rates, Citi put the export taxes at about $36 a barrel on diesel and $50 a barrel on jet for volumes that actually pay. If the tax bites only the non-SEZ barrels, Citi said, still-elevated cracks versus pre-conflict levels should largely offset the hit.

Jefferies described the duty as a ceiling rather than a simple tax, saying it broadly caps diesel and ATF spreads at $20 a barrel for standalone refiners such as Reliance, in line with the 2022 design. Freight, insurance and crude premiums have been stiff this cycle, the broker added, which makes those spreads harder to capture even before the levy.

WHO STILL FACES THE EXPORT LEVY

• Non-SEZ barrels: Reliance’s domestic-facing Jamnagar unit still pays when it exports, unlike the SEZ complex beside it.
• Nayara Energy: The 400,000 barrel a day Vadinar plant has no SEZ shield and has been shipping to markets that lost Russian supply, including Turkey and Brazil.
• State refiners: Indian Oil, Bharat Petroleum and Hindustan Petroleum pay on commercial exports, with a written exception for public-sector shipments to Nepal, Bhutan, Bangladesh and Sri Lanka.

Harshraj Aggarwal, lead analyst at YES Securities, said the export cess acts as a direct deduction from export realisations and narrows the spread between export and domestic margins, with the squeeze hardest on export-oriented names. Shares of Reliance fell 4.55 percent to ₹1,348.25 on March 28, the steepest one-day drop since June 2024, wiping ₹87,014 crore off the market value to ₹18.25 lakh crore, when the levy first returned. A lower rupee charge now hands that cash back, in part, to the same exporters. It does not show up on a retail forecourt.

Diesel’s Export Duty Is ₹9 Lower Than on September 1

The October 1 print is the second cut in two fortnights. From September 1 the diesel export levy has fallen by ₹9 a litre, and the ATF levy by ₹8.5 a litre. Petrol went the other way in early September, then came back down.

THE EXPORT LEVY SINCE MARCH

1. March 26, 2026: The Centre reimposes the export levy at ₹21.5 a litre on diesel and ₹29.5 a litre on ATF, and cuts domestic excise by ₹10 a litre on petrol and diesel.
2. May 16, 2026: Petrol exports join the net after sitting out the first weeks of the cycle.
3. September 1, 2026: Combined levies stand at ₹25 a litre on diesel, ₹19 a litre on ATF and ₹1.50 a litre on petrol.
4. September 16, 2026: Diesel falls to ₹20, ATF to ₹15 and petrol to ₹0.50.
5. October 1, 2026: Diesel falls to ₹16 and ATF to ₹10.5; petrol holds at ₹0.50.

India first put windfall taxes on fuel exports in July 2022 and took them off two years later. The 2026 version is an export levy only. The special additional excise duty on domestic crude, which had hit ONGC and Oil India in the earlier round, went to nil in September 2024 and has not returned. At launch the government expected about ₹1,500 crore a fortnight from the new charges. That take moves with the rate, the barrels that actually pay, and the SEZ volumes that do not.

Rates are set from average international prices of crude, petrol, diesel and ATF since the previous review. That is why a cut can land while cracks stay high: the dial follows a two-week price average, not a single Singapore print, and it does not wait for a political speech about energy security.

Indian Diesel Still Sails for Europe

The policy was sold as a way to keep molecules at home. The trade data show India is still a swing supplier of diesel, and Oil Minister Hardeep Singh Puri has said the country will keep exporting, including if Washington looks at fuel-export curbs, and will not walk away from existing contracts.

India has about 5.4 million barrels a day of refining capacity, imports about 90 percent of the crude it runs, and ships more than 1 million barrels a day of refined fuel, Puri said. He put capacity near 267 million tonnes a year now, nearly 290 million tonnes within a year, and 320 million tonnes by 2030-32. In FY25 the country exported 65.1 million tonnes of petroleum products worth $44.4 billion. Kpler’s September tracking put transport-fuel exports at 1.36 million barrels a day, the highest pace of the year on that series, and the firm has ranked India the second-largest seaborne diesel supplier after the United States, at about 10 percent of those flows.

The westward pull is still there. Argus assessments put the late-September gasoil arb from India to Europe rather than Singapore at about $20 to $22 a barrel. Reliance’s export-oriented Jamnagar unit ran at about 70 percent of capacity in August, with complex throughput at 1.23 million barrels a day, after a stronger July when gasoil sales to Europe resumed. Russian barrels, once the cheap feedstock behind that export machine, have become scarce and, at times, expensive. Kpler counted Russian crude arrivals at 2.82 million barrels a day in July, 55.9 percent of India’s imports, then 2.08 million in August and about 1.42 million in the first half of September. Vetsa Ramakrishna Gupta, chief financial officer of Bharat Petroleum, said no one was offering a discount on Russian crude.

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

Vivek Chaturvedi, Chairman, Central Board of Indirect Taxes and Customs, March 2026 briefing

That was the brief in March, after crude jumped during the US-Israeli war on Iran and flows through the Strait of Hormuz seized up. Six months later the same fortnightly tool is being turned the other way, even as Houthi strikes, damage to Saudi Arabia’s East-West pipeline, and Russia’s diesel ban through October keep the global middle-distillate market short. Delhi is judging that domestic stocks can bear more exports. The notification does not say the war premium has gone.

Petrol’s 50-Paise Duty Matches a Soft Crack

Petrol tells the same story from the other side. Its export duty was nil for stretches of the summer, jumped to ₹3.50 a litre in early August, went back to nil on August 15, then to ₹1.50 on September 1 and ₹0.50 from September 16. Holding it at ₹0.50 now is a near-pass. Gasoline cracks never ran with diesel. Reliance’s June quarter put Singapore 92 RON at $25.6 a barrel, up 159 percent year on year, a firm number that still sat miles below gasoil and jet. When the diesel-gasoline spread blows out, refiners make diesel and jet first. A 50-paise petrol export tax is a rounding error next to ₹16 on diesel.

Hardik Shah, a director at CareEdge Ratings, said the March cess was meant to keep enough fuel at home while the government absorbed the fiscal cost of the domestic excise cut. The October 1 order does not reverse that domestic cut and does not put a new burden on retailers. It simply takes less from each exported litre of diesel and ATF. Exporters who pay, above all non-SEZ plants, keep more of the crack. Drivers see the same board they saw on September 30.

The next revision will again follow average international prices since this review. Until then the live fact is narrow. Diesel leaves at ₹16 a litre, jet at ₹10.5, petrol at ₹0.50, and the pump does not move.

Disclaimer: This article is news reporting and analysis of India’s fuel export levies and is for information only. It is not investment, tax or legal advice and it does not recommend buying or selling shares of refiners or oil marketing companies, or tell exporters how to file duties. Readers should consult a qualified tax adviser or a registered financial adviser before acting on levy changes or related stocks. Figures and rates reflect the official notifications and company data cited here and can change at the next fortnightly review.