New Delhi: The applicability of newly reimposed export windfall taxes on shipments of diesel and ATF from Reliance Industries’ SEZ refinery remains the key uncertainty, following India’s fuel duty overhaul, with significant implications for refining margins and government revenues, according to analysts.
Under the revised framework, effective March 26, India has imposed export duties of Rs 21.50 per litre on diesel and Rs 29.50 per litre on aviation turbine fuel (ATF) while keeping petrol exports exempt. This came alongside a Rs 10 per litre cut in excise duty on petrol and diesel.
However, it is not yet clear whether exports from Reliance’s special economic zone (SEZ) refinery, which accounted for a large share of India’s refined product exports, will continue to enjoy exemptions, as they did under the 2022 windfall tax regime, UK’s Investec said in a note.
The new export levies are set at Rs 21.50 per litre for diesel and Rs 29.50 per litre for ATF. If Reliance’s SEZ exports remain exempt, the company’s refining margins could be largely protected. Conversely, inclusion under this tax would significantly impact margins on diesel and ATF shipments.
While oil marketing companies (OMCs) gain some relief from the new duties, with reduced marketing losses on petrol and diesel, the broader fiscal impact remains uncertain. The resolution of SEZ status will be crucial in assessing the financial implications for both Reliance and the government.
