India's Rs 14/litre diesel export tax and Rs 12.5/litre ATF levy compress margins at private refiners. The next fortnightly review on June 30 will determine if the levy holds.
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India raised the windfall tax on diesel and aviation fuel exports effective June 16, 2026. The special additional excise duty on diesel exports is now Rs 14 per litre. The levy on aviation turbine fuel exports increased to Rs 12.5 per litre. The tax on petrol exports remains unchanged.
The fortnightly adjustment targets private refiners that ship a large share of output abroad. Reliance Industries and Nayara Energy, both operating coastal refineries configured for export markets, face the most direct impact. The higher levy reduces the per-barrel realisation on diesel and jet fuel sold internationally.
For Reliance, diesel and ATF account for roughly 40% of its export revenue from the Jamnagar complex, the world's largest single-site refinery. The Rs 14 per litre diesel levy adds roughly $11.70 per barrel of tax based on standard conversion rates. ATF at Rs 12.5 per litre adds about $10.40 per barrel. Against current global refining margins, the effective netback on exported diesel drops significantly. The hike cuts into export margins that have supported refiner profitability this year.
Nayara Energy, majority-owned by a Rosneft-led consortium, exports about 60% of its diesel output from the Vadinar refinery. The levy reduces its export profitability directly by the same per-barrel amount.
India introduced windfall taxes on fuel exports in July 2022 after refining margins surged following the Russia-Ukraine war. The levy is reviewed every two weeks against a formula tied to global product cracks. The current hike reverses a series of reductions over the past year as margins narrowed. The unchanged petrol levy suggests the government sees domestic petrol supply as adequate or that the political cost of raising it is higher. Domestic diesel prices are regulated through a formula tied to import parity, not export parity.
The levy also affects global product markets. Lower export netbacks reduce the incentive for Indian refiners to run at full capacity for export markets. The result is less Indian diesel and jet fuel volume available to Asia and Europe, tightening those balances modestly. For crude oil traders, the levy marginally reduces Indian refinery demand for crude, since lower export profitability can prompt run cuts. The effect is small against global crude flows of 100 million barrels per day.
The next fortnightly review is due June 30. A narrowing of diesel margins could prompt the government to reduce the levy. Elevated cracks would keep it in place.
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