India Increases Windfall Tax on Fuel Exports Amid Crude Oil Price Swings

India has raised windfall taxes on exports of petrol, diesel and aviation turbine fuel (ATF), revising the rates with immediate effect as fluctuations in crude oil price continue to influence global energy markets. The revised levy, notified through a government order on August 3, is intended to support domestic fuel availability while increasing government revenue during a period of heightened geopolitical uncertainty.

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The export duty on petrol has been increased to ₹3.50 per litre from ₹2.50 per litre. The levy on diesel exports has been raised to ₹25.50 per litre from ₹15.50 per litre through a combination of two separate duties. The tax on aviation turbine fuel has also been revised upward to ₹22 per litre from ₹14.50 per litre.

Revision Comes After Two Weeks

The latest revision follows the government’s previous review conducted a fortnight ago. Windfall taxes are adjusted periodically in line with changes in international crude oil price trends and refining margins.

The government first introduced the windfall tax in July 2022 after global energy prices surged sharply. This was a means of collecting abnormal profits made by the refinery companies at a time when there were high international prices for oil while maintaining sufficient domestic supplies of fuel.

According to official sources, the levy had generated around ₹25,000 crore in the year 2022. The revenue fell to approximately ₹13,000 crore for FY24 with stabilization in international crude oil prices. The windfall tax was discontinued in December 2024 due to reduced international prices. However, it was reinstated in March 2026 following a renewed spike in crude oil price triggered by the conflict involving the U.S., Israel and Iran.

Global Oil Market Remains Volatile

International oil prices have remained highly volatile since the previous tax revision. On Monday, crude oil price declined by more than 5% after U.S. President Donald Trump postponed a planned military strike on Iran, signalling that diplomatic efforts were being pursued instead.

This dramatic decline was due to expectations that there might be a possible de-escalation in geopolitical tensions which may decrease the risk of supply in the global energy market. Yet, the uncertainty of the ongoing conflict makes the oil market vulnerable to geopolitical events.

The new duties on exports of crude oil have been introduced amid this scenario, as the government still monitors any fluctuations in international oil prices.

Policy Remains Linked to Global Prices

The government will review India's windfall tax in light of the fluctuation of oil prices in the global oil market and economics of exports. The system enables the government to change or revoke the levy depending on the market situation.

Due to the fact that geopolitics is still a major factor that affects the crude oil prices, future revisions in the export duty will be dependent on the changes in the international energy markets in the coming weeks.