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India Imposes A Windfall Tax On Oil Producers and Export Duties For Oil Products

July 1, 2022

Credit: Clinton/AdobeStock
Credit: Clinton/AdobeStock

India introduced export duties for gasoil, gasoline and jet fuel on Friday to help boost domestic supplies, while also imposing a windfall tax on oil producers that have benefitted from higher global crude oil prices.

The new taxes, announced in government orders, will dent the earnings of refiners like Reliance Industries Ltd and Nayara Energy, part owned by Russian oil major Rosneft, and oil producers Oil and Natural Gas Corp, Oil India Ltd and Vedanta Ltd.

Shares of Reliance fell as much as 8.7% to 2,370.10 rupees, their biggest intra-day percentage drop since November 2020, while Mangalore Refinery and Petrochemicals slumped 10% to 81.55 rupees.

Vedantashares dropped as much as 7.6% to hit their lowest since March 2021 and Oil and Natural Gas Corp shares fell 10.5%, their worst intra-day percentage fall since April 2020.

The windfall tax, in the form of a special additional excise duty (SAED), on oil producers was set at 23,250 rupees per tonne of crude oil, the orders said.

The new export duties were set at 6 rupees per litre for both gasoline and jet fuel, and at 13 rupees per litre for gasoil.

The government also set new rules requiring oil companies exporting gasoline to sell to the domestic market the equivalent of 50% of the amount sold to overseas customers for the fiscal year ending in March 31, 2023

For diesel, they are required to sell domestic buyers the equivalent of at least 30% of the amount that they export.

(Reporting by Nidhi Verma; Editing by Christian Schmollinger & Simon Cameron-Moore)




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