Fuel Price Implications of the New Export Tax Policy

The Indian government's latest move to reduce the windfall tax on petroleum exports has sparked widespread speculation about its impact on everyday fuel costs. Effective August 15, diesel export duty fell to Rs 24 per litre from Rs 25.5, and the petrol export levy was completely eliminated. Aviation turbine fuel export duty also dropped to Rs 19.5 per litre.

The tax was first implemented in 2022 to capture extraordinary earnings when crude oil prices surged. It was re‑introduced in March 2026 after a renewed price hike linked to Middle‑East tensions. The authorities adjust the levy every two weeks, mirroring fluctuations in global oil prices that currently hover near USD 87 per barrel.

For consumers, the reduction primarily benefits exporters and refining companies that ship fuel abroad. Domestic pump prices are governed by a formula that incorporates international crude costs, excise taxes, and state levies. As a result, the tax cut alone is unlikely to produce a noticeable dip in retail gasoline or diesel prices.

City‑wise data reveal that petrol prices range from Rs 101.81 in Ahmedabad to Rs 115.43 in Hyderabad, while diesel prices sit between Rs 94.08 in Chandigarh and Rs 103.64 in Thiruvananthapuram. These numbers underscore that, for now, fuel costs remain high across the nation.