Ministry of Finance hikes Special Additional Excise Duty on petroleum exports

The Ministry of Finance has notified a hike in Special Additional Excise Duty (SAED) on exports of petroleum products, imposing Rs 3 per litre on petrol, Rs 16.5 per litre on diesel, and Rs 16 per litre on Aviation Turbine Fuel (ATF). The move, announced through official gazette notifications on May 15, aims to adjust export levies while setting the Road and Infrastructure Cess (RIC) to nil on these products.

"The notification shall come into force with effect from May 16, 2026," read the statement.

Domestic excise duties on petrol and diesel meant for local consumption will remain unchanged, ensuring no immediate impact on retail fuel prices within the country. The differential taxation strategy is expected to boost government revenue from petroleum exports without affecting price stability for Indian consumers.

This marks the latest fortnightly revision in export duties, a mechanism introduced after levies were first imposed on March 27, 2026, amid global supply uncertainties stemming from West Asia tensions. The government has periodically calibrated these duties—previously reduced for diesel and ATF effective May 1, to balance domestic availability, discourage excessive exports when international prices are attractive, and prevent windfall gains for exporters at the expense of local supply.

Experts note that the adjustment, particularly the introduction of a modest duty on petrol exports (which was previously nil), could moderately impact margins of export-oriented refiners such as Reliance Industries, while public sector oil marketing companies with a stronger domestic focus may see limited effects. The policy continues to prioritise fuel security for Indian consumers by making exports relatively less lucrative.

Officials have maintained that such flexible tools like SAED allow the Centre to respond swiftly to volatile global crude markets without burdening domestic prices.

Fuel prices have a significant impact in India as transportation costs directly affect almost every sector, including agriculture, manufacturing, retail and services.

Economists caution that a prolonged rise in global crude oil prices could push inflation higher and widen pressure on India’s import expenditure.

For ordinary consumers, the effect is immediate and visible as fuel becomes more expensive, the overall cost of living gradually increases as well.