Petrol Export Duty Rises to ₹2.5, Diesel Duty Cut to ₹8.5

The Indian government has raised the export duty on petrol to ₹2.5 per litre from ₹0.5 per litre while reducing the levy on diesel shipments to ₹8.5 per litre from ₹16 per litre. The revised rates took effect on October 16, according to a government order issued late Thursday.

The contrasting changes come as India continues to adjust export duties on petroleum products in response to fluctuations in international crude oil and Fuel Prices. The revisions form part of the government’s fortnightly review of levies on fuel exports.

Petrol Export Duty Increased Fivefold

Under the revised rates, the export duty on petrol has increased fivefold, rising by ₹2 per litre to ₹2.5 per litre. The duty on diesel exports, meanwhile, has been reduced by ₹7.5 per litre, from ₹16 to ₹8.5.

The changes apply to fuel exported from India and reflect the government’s continuing adjustments to taxes on petroleum shipments amid changing international market conditions.

The latest government order did not provide a separate explanation for increasing the petrol export duty while reducing the levy on diesel. However, the authorities review the rates every fortnight, taking into account movements in global crude oil and petroleum product prices.

Why India Introduced Windfall Taxes on Fuel Exports

India first introduced windfall taxes on fuel exports in July 2022, when elevated international energy prices created opportunities for domestic refiners to earn higher margins by selling petroleum products in overseas markets.

Windfall taxes are designed to capture a portion of unusually high gains associated with favourable market conditions. Export duties can also influence refiners’ decisions about whether to sell petroleum products domestically or ship them abroad.

The government withdrew the taxes in 2024. However, it reintroduced export levies in March 2026 after crude oil prices surged during the US-Israeli war on Iran.

The renewed measures came amid heightened uncertainty in international energy markets, prompting the government to resume adjustments to fuel export duties.

Fortnightly Reviews Track Global Oil Prices

The government reviews export duties on petrol and diesel every two weeks and revises them according to changes in international crude oil and petroleum product prices.

These periodic adjustments allow the authorities to respond to changing energy market conditions rather than maintaining fixed export levies regardless of price movements.

When international prices and export margins change, revisions to duties can alter the economics of shipping fuel overseas. Higher levies can reduce the financial incentive to export, while lower duties can ease the tax burden on exporters.

However, the latest revision does not establish a uniform direction for all petroleum products. Petrol exports face a higher levy, while diesel shipments benefit from a substantial reduction.

What the Revised Duties Mean for Fuel Exporters

The increase in petrol export duty raises the tax cost for exporters by ₹2 per litre compared with the previous rate. At the same time, the reduction in diesel duty lowers the applicable levy by ₹7.5 per litre.

These changes may affect the relative economics of exporting the two fuels, depending on international prices, refining margins and other operating costs. The actual impact on individual refiners will vary according to their export volumes and commercial arrangements.

The revisions also highlight the government’s continued use of export duties as a policy instrument during periods of volatility in global energy markets.

Do the Changes Affect Petrol and Diesel Prices in India?

The revised duties specifically concern petrol and diesel exports. The government order cited in the report does not announce a corresponding change to the duties on fuel sold for domestic consumption.

Export duties and domestic fuel taxes are separate measures, so the latest revision alone does not establish that petrol or diesel prices at Indian retail outlets will increase or decrease.

For now, the key changes are the higher petrol export duty of ₹2.5 per litre and the lower diesel export duty of ₹8.5 per litre, both effective October 16. The government is expected to continue reviewing the levies as international crude oil and petroleum product prices evolve.