Abolition of export tax on petrol made diesel and jet fuel more expensive to ship

Petrol Diesel Export Duty: The central government has made a major change in the rules for exporting fuel from the country. According to a notification issued by the finance ministry on Saturday, the government has completely abolished the special additional excise duty on petrol exports. On the other hand, the export tax on diesel and aviation fuel (ATF) has been increased. The government’s move comes at a time when the ongoing war in West Asia is adversely affecting oil supplies and prices across the world.

The tax on diesel has increased by Rs 3 and on ATF by 50 paise

After the new order of the Finance Ministry, no duty will be levied on the export of petrol. Earlier, a tax of Rs 2.50 per liter was levied on sending petrol abroad, which has now been reduced to zero. As for diesel, the duty on its export has been directly increased by Rs 3 per litre. Earlier, the tax on diesel export was Rs 8.50 per liter which has now increased to Rs 11.50 per litre. Apart from this, the export of aviation fuel (ATF) has also been increased by 50 paise per litre. The duty on ATF has now increased from Rs 10.50 to Rs 11 per litre.

Why was this tax introduced in March?

The government implemented this export duty rule in the last week of March. At that time, due to rising military tensions in the Middle East (West Asia), energy supplies were disrupted across the world. Due to this crisis, the prices of crude oil rose rapidly in the international market. When oil prices rise in foreign markets, oil refinery companies see more profit in selling oil abroad. The clear objective of the government was that refinery companies should not prioritize foreign markets over domestic customers in order to earn more profits. For this reason this tax was imposed on exports.

The blockade of the Hormuz route changed India’s math

Before this war broke out in West Asia, India imported about 45 percent of its total crude oil requirements through the Strait of Hormuz. It is a very important sea route that connects the Persian Gulf with the rest of the world markets. When the war disrupted commercial shipping through this route, India was forced to look for other options to buy crude oil.

An attempt to protect domestic consumers from inflationary shocks

The latest change comes at a time when India is struggling to cope with the impact of the ongoing war in West Asia. The crisis has not only destabilized the supply of crude oil, but also increased the risk of shipping. Due to this, oil prices remain high all over the world. However, to protect the common people of the country from this global shock, the Indian government has kept the retail prices of petrol and diesel stable in the domestic market. Along with this, the government is using the export duty to determine how much fuel the refinery companies will send out of the country.