The government increased the windfall profit tax on diesel exports from Rs 5 to Rs 7 per litre and imposed a Rs 2 tax on aviation turbine fuel exports.
New Delhi: According to official figures, India’s diesel exports decreased 11% in July, while petrol exports declined 4.5% after the government imposed a windfall profit tax on such sales.
Diesel exports fell to 2.18 million tonnes in July from 2.45 million tonnes the previous month, according to data from the Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC).
Similarly, gasoline exports dipped to 1.1 million tonnes in July, down from 1.16 million in June.
On July 1, India became the first country to levy windfall profit taxes on energy corporations, joining a growing list of countries. Petrol and aviation turbine fuel was subject to export charges of Rs 6 per litre, while diesel was subject to tariffs of Rs 13 per litre.
The charges were partially lowered in three rounds on July 20, August 2, and August 19 and have now been abolished for petrol, with diesel and ATF remaining at Rs 7 and Rs 2 per litre, respectively.
The export charges assisted in relieving the demand for domestic gasoline supplies. The tariffs were designed to discourage companies like Reliance Industries Ltd and Russia’s Rosneft-backed Nayara Energy from exporting petroleum to global markets rather than supplying locally.
With state-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), which control 90% of the market, decided to sell petrol and diesel at significant losses to help the government reduce inflation, private fuel retailers choose to sell fuel on the international market rather than locally at a loss.
This, combined with bulk customers like state transportation buses waiting up at state-owned oil firms’ petrol pumps rather than paying a higher market price for direct purchase, resulted in retail outlets running out of fuel in various states.
The imposition of export taxes and regulations demanding precedence for domestic supplies over exports restored order at the gas pumps. Following Russia’s invasion of Ukraine in February, international oil prices skyrocketed, bringing cracks or margins on fuels like gasoline and diesel to all-time highs.
In July, India exported 4.68 million tonnes of petroleum products, with petrol, diesel, and ATF accounting for 82% of total exports. According to PPAC data, ATF shipments fell slightly in July to 583,000 tonnes from 591,000 tonnes the previous month.
Diesel exports peaked at 3.36 million tonnes in March before declining to 2.7 million tonnes the following month. They increased to 3.05 million tonnes in May before declining to 2.45 million in June.
The most diesel was exported in April 2020, when 3.4 million tonnes of the fuel were sent. Petrol shipments peaked in March at 1.6 million tonnes.