India Increases Export Duty on Diesel and ATF

The Indian government has significantly increased export duties on diesel and aviation turbine fuel (ATF) to boost state revenue and manage the availability of fuel within the domestic market. These changes, announced by the finance ministry via notifications dated April 1, 2026, take effect immediately.

Under the new structure, the export duty on diesel has risen to ₹55.5 per litre, up from the previous rate of ₹21.5 per litre. Similarly, the export levy on aviation turbine fuel has been increased to ₹42 per litre from ₹29.5 per litre. Export duties on petrol remain at nil.

Revised Tax Structure and Components

The increase in the final export duty is the result of revisions to specific tax components. For high-speed diesel, the Special Additional Excise Duty has been raised to ₹24 per litre, while the Road and Infrastructure Cess has been increased to ₹36 per litre.

These components together determine the total duty burden on outbound shipments. The government is utilizing these mechanisms to shore up revenues amid mounting fiscal pressures.

Strategic Rationale and Market Context

Officials stated that the duty hike is intended to prevent exporters from exploiting price differentials. This follows a surge in global crude oil prices linked to the onset of the Iran war.

The current measures follow an earlier set of duties imposed on March 26, 2026. At that time, the government introduced a ₹21.50 per litre duty on diesel and a ₹29.50 per litre duty on ATF to ensure domestic fuel availability during the conflict in West Asia.

Regional instability has significantly impacted energy markets. Tensions escalated on February 28, 2026, when the United States and Israel launched military strikes on Iran, which prompted a response from Tehran. A two-week ceasefire agreed upon by the three countries on April 8, 2026, provided a temporary pause in the conflict.

The government is also reviewing tax and fee measures to protect airlines and passengers from volatile global oil prices, aiming to prevent higher fuel costs from impacting airfares.

Global Oil Price Outlook

Market analysis from brokerage firm Macquarie suggests that oil prices are likely to remain supported in the $85-90 a barrel range, with a potential gradual move toward $110 as shipments through the Strait of Hormuz normalize.

The firm further noted that if disruptions continue through April, Brent crude prices could potentially rise to $150.

The revenue department has indicated that it will continue to review the situation every fortnight to determine if further adjustments to the fuel duty structures are necessary.