Govt scraps export duty on petrol, raises levy on diesel and ATF exports

The government has cancelled the special additional excise duty on petrol exports, while raising the export duty on diesel and aviation turbine fuel (ATF). The finance ministry issued a notification on Saturday. The decision comes as conflicts across the world affect oil prices.

Petrol gets relief, but the export duty on diesel has gone up by Rs 3 a litre and on ATF by 50 paise a litre. The question is what effect the increase will have on ordinary people's pockets.

Under the new rates, no duty will now be levied on petrol exports. It was earlier Rs 2.50 a litre. The duty on diesel exports has been raised from Rs 8.50 a litre to Rs 11.50 a litre. The duty on ATF exports has been raised from Rs 10.50 a litre to Rs 11 a litre.

The export duty was imposed at the end of March this year. At that time, the conflict in the Middle East had disrupted global energy supplies and crude oil prices in the international market were soaring. Global prices were making exports more profitable. The government's aim was that oil refining companies should not favour foreign markets over buyers in the country.

Before the conflict began, about 45% of India's crude oil imports came through the Strait of Hormuz, a major sea route that links the Persian Gulf to the world market. When the movement of merchant ships on this route was disrupted, India had to find other routes for its crude oil supply.

The latest change in duties comes as India grapples with the effects of the war in West Asia. The war has made crude oil supply unstable, increased risks on the sea route and kept oil prices high around the world.

The Centre has tried to shield domestic customers from the full impact of the shock by keeping retail prices of petrol and diesel stable. It has also used export duties to control how much fuel refiners send abroad.