India Hikes Export Duties on Diesel and ATF to Secure Domestic Supplies

The Indian government has increased export duties on diesel to ₹14 per litre and aviation turbine fuel (ATF) to ₹12.5 per litre, while maintaining the duty on petrol at current levels. This strategic fiscal policy aims to curb fuel hoarding and ensure that domestic supply remains prioritized for local consumption rather than international export. By narrowing the margins for refiners, the government is effectively nudging them to redirect output toward the domestic market to mitigate potential shortages.

The regulatory measure follows a surge in India's total exports, which reached a record $45.2 billion in May. Despite this growth, the trade deficit has widened to $28.21 billion, heavily influenced by a 53.8% increase in oil imports. As West Asian geopolitical tensions continue to affect global energy prices, the Indian government is proactively managing domestic energy availability to insulate the logistics and aviation sectors from supply volatility and high price environments.

In addition to the tax adjustments, state authorities are intensifying oversight of fuel distribution, including new mandates that require diesel to be sold only in government-approved containers. These combined efforts reflect a broader policy priority of ensuring stability in the domestic energy chain. While market analysts note that these duties may pressure the short-term profit margins of oil marketing companies, the move is seen as essential for maintaining domestic fuel security during a period of high international energy market uncertainty.