Govt Hikes Export Duty on Petrol, Diesel; Will It Impact Domestic Fuel Prices?
In order to regulate prices and maintain the stock of petroleum products in the domestic market, the government of India has today increased the export duty on petrol, diesel, and ATF. Export duty on petrol has been raised by Rs 5 per litre and Rs 12 per litre on diesel. Export duty on ATF has been upped by Rs 6 per lire. It must be noted that an increase in export duty on the various fuels will not increase domestic fuel prices. The government has also directed exported to sell 50 per cent of their petrol in domestic markets and 30 per cent of diesel as well. The move will also help the government’s kitty as it looks to benefit from the rising crude oil prices.
“However, Nepal and Bhutan have been exempted from paying additional duty on these petroleum products. Also, this condition is not applicable to 100 per cent EoUs and SEZ unites,” said Ministry of Commerce and Industry.
The government has also announced taxes on windfall gains made by crude oil producers. The government also slapped a Rs 23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices, a separate government notification showed.
The tax on exports follows oil refiners, particularly the private sector, reaping huge gains from exporting fuel to markets such as Europe and the US. The tax on domestically produced crude oil follows local producers reaping windfall gains from the surge in international oil prices.
Shares of Reliance Industries Ltd (RIL), Oil and Natural Gas Corporation (ONGC) witnessed a sharp fall after the export tax hike announcement. RIL shares plunged more than 5 per cent whereas ONGC tanked 10 per cent in Friday’s early deals.
Domestic petrol and diesel prices have been steady since May 21 when the government announced a cut in prices. Domestic prices are likely to remain low as the taxes announced today by the government do not impact domestic fuel prices.
On July 1, Delhi is selling petrol at Rs 96.72 per litre and diesel at a price of Rs 89.62 per litre. On the other hand, Mumbai is providing petrol at Rs 111.35 per litre. The diesel price in the city is currently Rs 97.28 per litre. In Kolkata, the petrol price stands at Rs 106.03 per litre and the diesel price at Rs 92.76 per litre, whereas, people in Chennai have to pay Rs 102.63 for one litre of petrol and Rs 94.24 per litre for diesel.
Domestic fuel prices in the country are set and revised by Oil Marketing Companies (OMCs) on a daily basis. The prices are based on the fuel’s benchmark average price over the last 15 days in the global market and the foreign exchange rates. Apart from OMCs, the fuel prices also varies from state to state; this happens because petrol and diesel prices depend on several local factors like freight charges and local taxes (VAT).