India has announced a series of tax changes including a levy on fuel exports, as the country tries to shield consumers from the impact of a deepening conflict in the Middle East that has upended energy supply.
The South Asian nation imposed a 21.5 rupee (23 cents) per liter duty on exports of diesel and 29.5 rupees on jet fuel, Finance Minister Nirmala Sitharaman said in a post on X. “This will ensure adequate availability of these products for domestic consumption,” she said.
Shares in top private refiner Reliance Industries Ltd., a major exporter of fuels, fell as much as 2.9% on the news.
India has also reduced taxes on locally sold gasoline and diesel by 10 rupees per liter each, a reduction intended to help keep prices stable at the pump.
As the third-largest oil consumer, India is among the countries most impacted by the war in the Persian Gulf and the closure of the Strait of Hormuz, which connects the region with the wider world. It has seen acute shortages of liquefied petroleum gas, used for cooking, and of liquefied natural gas.
The country raised LPG prices earlier this month and subsequent speculation around a likely increase in pump prices of diesel and gasoline has led to panic buying, with people lining up outside forecourts.
The energy crunch come at a delicate time for a price-sensitive country, with elections in key states where Prime Minister Narendra Modi’s Bharatiya Janata Party is looking to expand its foothold. Opposition parties have been pressing for more forceful measures to address the fuel crunch.
Diesel and jet fuel together form a significant portion of India’s refined product exports. Last month, India discharged around 500,000 barrels a day of the two products combined, out of the roughly 1.2 million barrels a day of fuels exported, tanker trading data from data intelligence firms Vortexa and Kpler showed.
In previous months, most of the so-called middle distillates — diesel and jet fuel — would be sent to Europe, but that proportion has shrunk as the bloc tightens its restrictions on the use of Russian crude. Most flows now go to Africa, followed by Asia, according to the data.
The export levy should help contain the impact of skyrocketing international gasoline and diesel prices, as exporters will have to pay higher duties, Oil Minister Hardeep Puri said in a separate post on X.
Fuel retailers have been losing 24 rupees a liter on gasoline and 30 rupees on diesel sales at their fuel stations since the jump in benchmark oil prices. India has kept pump prices frozen since March 2024, despite a 30% increase in global prices of crude.
The tax reduction will lower government earnings by nearly 1.55 trillion rupees on an annual basis, Madhavi Arora, lead economist at Emkay Global, said.
India last reduced excise duty on diesel and gasoline in May 2022 to shield consumers during Covid. The government had raised excise duties in April 2025 but didn’t pass on the impact to consumers.
- India’s new export duties aim to protect domestic fuel availability amid rising global prices.
- The country is facing acute energy shortages impacting consumer behavior and leading to panic buying.
- Political implications arise as the government navigates fuel pricing concerns ahead of key elections.
