The Finance Ministry raised the special additional excise duty (SAED) on diesel exports to Rs 11.50 a litre from Rs 8.50. It set the levy on aviation turbine fuel (ATF) exports at Rs 11 a litre from Rs 10.50. Both changes came through notifications issued on Saturday, October 311. The same notifications scrapped the levy on petrol exports, taking it to nil from Rs 2.50 a litre1.
| Fuel | Levy before (Rs/litre) | Levy now (Rs/litre) |
|---|---|---|
| Petrol | 2.50 | Nil |
| Diesel | 8.50 | 11.50 |
| ATF | 10.50 | 11.00 |
Source: Finance Ministry notifications of October 311
The SAED is charged on fuel that refiners ship abroad. It is not a tax on fuel sold at Indian pumps, and Saturday's orders made no change to retail prices1.
A larger levy leaves a refiner with less from an export cargo, which tilts barrels back to the home market. The levies were created in late March, when the Middle East war sent global fuel prices up1. New Delhi wanted to stop refiners from preferring export realisations over domestic buyers1.
A 12-month high in exports
India shipped about 700,000 barrels a day (b/d) of diesel in October, the most in 12 months, up from 620,000 b/d in September, Kpler data cited by BusinessLine showed2. That is 2.90 million tonnes for the month, the highest since September 20252.
Refineries are running above 100% of capacity and tilting yields towards diesel, Kpler's Sumit Ritolia told BusinessLine2. "I see October exports as this year's high," he said, because festive, freight and farm demand should absorb some of the extra output at home2.
World supply has been short. The International Energy Agency said Middle East disruptions and lower Russian supply have cut diesel and gasoil availability. It put the shortfall at 1.5 mb/d in the second quarter of 2026 and 1.7 mb/d in the third, against a year earlier2. The IEA expects tightness to run into 20276.
Rupee earnings reflect that. India's petroleum product export earnings rose nearly 50% in rupee terms to Rs 2.59 lakh crore in April to September, even as volumes fell 16%4. The figures came from petroleum ministry data reported by The Economic Times4. Diesel alone earned about Rs 1.2 lakh crore, up 58%4.
Why Delhi prefers the home market
Retail petrol and diesel prices have been held steady through the war1. Pump prices have moved only once since the conflict began, a cumulative 7.5% increase in May, according to Oxford Economics3.
The cost stack behind those frozen prices is heavy. Indian refiners pay $10 to $20 a barrel in freight, with physical crude trading about $20 above a Brent futures price of $115, industry executives told The Economic Times7. Brent spot was $123.1 a barrel on October 27, up 100.7% since the start of the year, EIA data show8.
Reliance Industries said SAED costs and under-recoveries in its domestic fuel retail business held back earnings growth at its oil-to-chemicals arm, which posted record quarterly EBITDA of Rs 25,203 crore5. The company did not give a figure for the under-recovery5. State refiners, which mostly sell at home where prices do not track global markets quickly, face margin pressure too, The Economic Times reported7.
Who carries the risk
Reliance is the biggest exporter, accounting for about 70% of India's fuel exports, with Rosneft-backed Nayara Energy, MRPL and others making up the rest4. Its Jamnagar complex can process 1.4 million b/d and is a large diesel supplier to the US, Europe, Africa, Asia and Australia9. Reliance has also supplied diesel and petrol to Jio-bp outlets, industrial buyers and state oil marketing companies facing shortages10.
For road freight and third-party logistics contracts, the levy does not move pump prices, so a fuel surcharge clause tied to retail diesel will not shift because of it1. The live risk is a separate decision to revise retail prices. Oxford Economics called November "the last realistic window" for a rise before campaigning for early-2027 state elections, and put the possible increase at about half of May's 7.5%3.
For aviation and air cargo, the ATF levy adds to a cost line that is already the main problem. IndiGo's fuel bill rose 67.2% to Rs 9,967 crore in the September quarter11. Chief executive Willie Walsh said the airline expects to recover only about 60% of the increase through fares and surcharges11. ICRA expects the domestic airline industry to lose Rs 36,000 crore to Rs 38,000 crore in FY27, citing high ATF prices among the causes12.
What to watch
First, whether the diesel levy holds exports below October's peak. Kpler expects refinery runs of 5.6 to 5.7 mb/d and no major maintenance, which supports volumes2. Second, any retail price revision after the festive season, which would reach freight and bus operators far more directly than the levy3. Third, war risk and Hormuz disruption, which keep Indian diesel priced into export markets and keep the arbitrage for Indian cargoes open7, 8.