Why India has imposed export tax on petrol, diesel
What's the story
The Indian government has imposed an export tax on petrol and diesel. The decision comes as a response to the recent spike in international fuel prices. Petroleum and Natural Gas Minister Hardeep Singh Puri announced the move on Friday, saying it is a strategic step to prioritize domestic supply and protect consumers from global price fluctuations.
Tax details
Exporters liable to pay new tax
Puri clarified that any refinery exporting petrol and diesel to other countries will be liable to pay this new export tax. The decision comes after a sharp rise in global crude oil prices, which have jumped from around $70 per barrel to nearly $120 per barrel in the last month. This has resulted in steep retail fuel price hikes across regions, including Southeast Asia (30%-50%), North America (around 30%), Europe (20%), and parts of Africa (up to 50%).
Cost absorption
Centre has chosen to take fiscal hit
Puri said the government had a choice to either pass on the full impact of rising global prices to consumers, like many countries do, or absorb part of the burden to protect Indian households. The Centre has chosen to take a fiscal hit to moderate domestic fuel prices since Russia-Ukraine conflict began, he said. Puri added that the government has foregone tax revenues to offset oil marketing companies' under-recoveries, currently estimated at about ₹24/liter for petrol and ₹30/liter for diesel.