scorecardresearchGovernment cuts windfall tax on diesel, aviation fuel shipments

Government cuts windfall tax on diesel, aviation fuel shipments

Updated: 20 Jul 2022, 07:50 AM IST
TL;DR.

New Delhi also cut the tax on domestically produced crude to 17,000 rupees a tonne, effective July 20.

Indian Finance Minister Nirmala Sitharaman delivers her remarks during the High Level Seminar on Strengthening Global Collaboration for Tackling Food Insecurity on the sidelines of the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, Friday, July 15, 2022. AP/PTI(AP07_15_2022_000124B)

Indian Finance Minister Nirmala Sitharaman delivers her remarks during the High Level Seminar on Strengthening Global Collaboration for Tackling Food Insecurity on the sidelines of the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, Friday, July 15, 2022. AP/PTI(AP07_15_2022_000124B)

(Bloomberg) -- India eliminated a levy on gasoline exports and cut windfall taxes on other fuels less than three weeks after they were imposed, offering relief for the nation’s No. 1 fuel exporter Reliance Industries Ltd. and top crude explorer Oil & Natural Gas Corp.

New Delhi reduced the windfall tax on diesel and aviation fuel shipments by 2 rupees (3 cents) a liter, and scrapped completely a 6-rupees-per-liter levy on gasoline exports, according to a government notification. It also cut the tax on domestically produced crude by about 27% to 17,000 rupees a ton. Bloomberg News first reported Thursday that the government was considering lowering the taxes.

India imposed the taxes on July 1, joining a growing number of nations placing windfall levies to tap energy companies’ booming profits. But international fuel prices have cooled since then, eroding profit margins at both oil producers and refiners.

Read more: countries around the world scramble to ease pressure at the pump

International crude prices have slumped since mid-June on concerns about a potential global recession, at one point erasing all the gains that followed Russia’s invasion of Ukraine. Returns from processing gasoline and diesel in Asia have plunged in recent weeks, with industry consultant FGE expecting a further decline in margins this quarter due to increased supplies.

Reliance and Rosneft-backed Nayara Energy Ltd., India’s only privately owned refiners, make up 80% to 85% of India’s overall gasoline and diesel exports, according to FGE.

First Published: 20 Jul 2022, 07:49 AM IST