Page 49 - Policy Economic Report - March 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Alongside the excise reduction, the Government has simultaneously introduced an export levy on diesel.
At a time when international diesel prices have surged sharply, the levy is designed to disincentivise
exports and ensure that refinery output is directed first towards meeting domestic demand. Keeping
Indian pumps fully supplied takes precedence over export opportunities, however commercially
attractive those may be at current global prices.

This decision is consistent with the approach adopted since the Russia-Ukraine conflict of 2022, when
OMCs absorbed sustained losses and the Government cut central taxes to shield households and
businesses from global price volatility. The same principle governs today’s intervention: India’s citizens
and industry should not bear the cost of disruptions they did not cause. The Government will continue
to monitor the evolving global energy situation and take all measures necessary to maintain supply
stability and price protection for Indian consumers.

India reimposes windfall tax on diesel, ATF exports; sets rates at Rs 21.5/litre and Rs 29.5/litre

India has reintroduced windfall taxes on fuel exports, setting a levy of Rs 21.5 per litre on diesel and Rs
29.5 per litre on aviation turbine fuel (ATF), according to a government order issued.

The move marks a reversal of the government’s earlier decision to scrap such taxes, as authorities seek
to recalibrate revenue from the energy sector amid heightened volatility in global oil markets.

The latest notification specifies that the windfall tax will apply to the export of diesel and ATF, key
refined products that account for a significant share of India’s outbound petroleum shipments.

India had abolished the windfall tax regime in 2024, removing levies on crude oil production as well as
exports of petrol, diesel and aviation turbine fuel. The reimposition indicates a renewed policy shift as
global crude prices remain sensitive to geopolitical tensions, particularly in the Middle East.

The development comes alongside a broader set of changes to the country’s fuel taxation framework,
including revisions to excise duties on petrol and diesel notified separately.

Govt offers 21 oil, gas blocks for exploration in OALP bid

The Centre has launched the eleventh round of the open acreage licensing policy (OALP-XI), offering 21
oil and gas exploration blocks spread across 80,228 square kilometres.

Of the total blocks on offer, 12 are on-land blocks, four are shallow-water blocks, one is a deep-water
block and four are ultra-deep water blocks.

The announcement comes at a time when India is struggling to secure energy supplies amid the ongoing
conflict in West Asia, due to its high reliance on imports of crude oil and gas. India is dependent on
crude and natural gas for roughly 90 per cent and 50 per cent, respectively, of its total domestic
requirements.

Hardeep Singh Puri, Union minister of petroleum and natural gas, said the OALP-XI is a step towards
fast-tracking bidding, expanding acreage, and strengthening India’s energy security.

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