In an effort to bring domestic pricing in line with higher global crude prices, the Ministry of Finance has, effective immediately, raised excise duties and windfall taxes on some petroleum products. These include high-speed diesel and aircraft turbine fuel (ATF).
The government has increased the export duty on fuel from 21.5 to 55.5 rupees per litre, while high-speed diesel now carries a Special Additional Excise Duty of 24 rupees per litre. In addition, the Finance Act, 2018 increased the Road and Infrastructure cess on diesel to ₹36 per litre.
The export price on petrol is still zero, while the tariff on aviation turbine fuel has gone up from 29.5 to 42 rupees per litre.
With the global market being so unpredictable, especially after the disruptions caused by the West Asia conflict, the goal of the modifications is to ensure that exporters do not profit from price differentials.
After the US, Israel, and Iran’s militarisation caused supply networks to be disrupted and a temporary truce was negotiated on April 8, global oil prices became more volatile.
The price of aviation fuel in the country has also increased significantly, with oil marketing corporations charging domestic carriers 8.56% more, or ₹1,04,927.18 per kilolitre, for ATF. As a result of price pressures on a worldwide scale, prices for international airlines and non-scheduled operators have risen by more than 114%.
While analysts predict that airlines would feel the pinch of increased ATF costs in the near future, they also note that oil marketing businesses may see a temporary boost to their profit margins.
The government’s policy posture is responsive, as seen by the duty modifications that are effective immediately, in response to the ongoing disturbances in the global energy market.
