India cuts fuel export levy, raises crude windfall tax

Market: Crude oil, Oil products
03/08/22

India has cut duties on exports of diesel and jet fuel but increased its windfall tax on domestic crude production.

The government has removed a levy of 4 rupees/litre ($8/bl) on jet fuel exports. Tax rates on diesel exports will be cut further to Rs4/l from Rs10/l, the finance ministry said on 2 August.

But Delhi has increased its windfall tax on domestic crude production to Rs17,750/t, up by 4pc from 19 July, when it reduced the levy by 27pc from the initial Rs23,250/t.

The changes will take effect on 3 August.

Fuel shortages in the country led India to impose duties on oil product exports on 1 July. Delhi also levied a windfall tax on crude production because domestic producers had been able to sell crude to Indian refineries at international parity prices and make windfall gains, the finance ministry said. The taxes will be reviewed every 15 days based on international prices. Brent crude prices have dropped by about 7pc since 19 July to around $100/bl.

India is a major regional exporter of oil products. Refiners in the country exported 630,000 b/d of gasoil and 390,000 b/d of gasoline in the first half of this year, according to data from oil analytics firm Vortexa.

Gasoline was selling at Rs96.72/l and diesel at Rs89.62/l in Delhi on 3 August, unchanged since 22 May.

By Reena Nathan

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