India Cuts Fuel Export Duties from June 1 Amid Gulf Crisis

India’s government cut export duties on petrol, diesel, and aviation turbine fuel (ATF) effective June 1, 2026. Petrol’s export tax fell to ₹1.5 per litre, diesel to ₹13.5 per litre, and ATF to ₹9.5 per litre. The cuts follow supply disruptions in the Gulf region and aim to balance domestic availability with export encouragement. Domestic pump prices remain unchanged.

Sharp Drop in Export Levies

India halved petrol’s export duty to ₹1.5 per litre from ₹3 per litre set in May. Diesel export duty fell to ₹13.5 per litre from ₹16.5 per litre, while ATF dropped to ₹9.5 per litre from ₹16 per litre. These represent massive cuts from earlier rates of ₹55.5 per litre on diesel and ₹42 per litre on ATF. The government also exempted road and infrastructure cess on petrol and diesel exports to boost shipments.

Gulf Conflict Triggers Market Volatility

Hostilities involving Iran, the US, and Israel disrupted shipping lanes in the Strait of Hormuz and spiked global crude oil prices. India’s export duty cuts reflect strategic adjustments to international tensions. Global crude and refined product prices swung sharply, forcing the government to act quickly to manage local fuel supply and prevent shortages.

Domestic Prices Frozen, Reviews Every Two Weeks

Retail petrol and diesel prices at pump stations remain unchanged despite the export duty cuts. The government reviews export duties every fortnight based on average global prices of crude oil, gasoline, diesel, and jet fuel. The next review is scheduled for mid-June. This fortnightly mechanism allows India to respond quickly to market swings without passing costs to domestic consumers.

Airlines Face Continued Pressure

ATF prices for domestic airlines remain at ₹104,927.18 per kilolitre, unchanged for the second consecutive month. However, international carriers saw ATF prices cut 27% in June’s monthly revision to about $1,100 per kilolitre, offering relief as global oil prices eased. Indian carriers like Air India and IndiGo cut flight frequencies in May due to high fuel costs, with Air India reducing domestic flights by up to 22 percent.

Final Thoughts

India’s export duty cuts aim to balance domestic fuel security with export competitiveness during the Gulf crisis. Domestic consumers see no immediate pump price relief, but the fortnightly review mechanism signals the government’s flexibility in responding to global shocks.

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