Reliance Industries Limited (RIL) shares dropped over 4% on Friday, March 27, 2026, wiping out more than Rs 82,000 crore from the company's market value. The significant fall followed the Indian government's decision to reintroduce a windfall tax on exports of diesel and aviation turbine fuel (ATF). This policy reversal aims to boost domestic fuel supply amid volatile global oil prices and recalibrate government revenue.[newsbytesapp+2]
Government Reinstates Fuel Export Tax
The government issued an order on Thursday, March 26, reversing an earlier decision to scrap these taxes. The new export duty on diesel is now set at Rs 21.5 per litre, while ATF exports face a levy of Rs 29.5 per litre.Finance Minister Nirmala Sitharaman confirmed that these higher duties will ensure adequate availability of these products for domestic use.[newsbytesapp+5]
RIL, led by Mukesh Ambani, is a major exporter of both diesel and ATF. The company operates twin refineries in Jamnagar, which produce approximately 5 million tonnes of ATF. A substantial portion of this output is exported, accounting for about one-fourth of India's total ATF production.The reintroduction of the tax directly impacts the profitability of such exports for large refiners like RIL.[m+2]
Market Reacts to Policy Shift
The share price decline marked the biggest single-day sell-off for RIL stock since June 2024. The company's stock closed at Rs 1,350.80, down 4.41% for the day.This sharp drop in RIL shares also dragged down benchmark indices, with both the Sensex and Nifty falling nearly 2% during Friday's trading session.[timesofindia+4]
The government's move comes a day after Nayara Energy, India's largest private fuel retailer, increased its petrol and diesel prices. Nayara Energy raised petrol prices by Rs 5 per litre and diesel by Rs 3 per litre.Dealers expressed concern over these price hikes, warning of potential demand impact and possible protests.[m+5]
India first imposed windfall profit taxes on July 1, 2022, targeting supernormal profits made by energy companies. These taxes were initially levied on crude oil production and exports of petrol, diesel, and ATF.The government later scrapped these levies in December 2024, following a drop in global crude oil prices.[livemint+6]
The reimposition of the windfall tax reflects a renewed policy shift. Global crude oil prices remain sensitive to geopolitical tensions, particularly from the ongoing US-Israel-Iran conflict.This volatility prompted authorities to recalibrate revenue from the energy sector.[livemint+6]
Outlook and Future Reviews
Alongside the reintroduction of export duties, the government also cut excise duties on fuels meant for domestic consumption. The special additional excise duty on petrol was reduced to Rs 3 per litre, and it was completely scrapped on diesel.This dual approach aims to shield domestic consumers from rising global oil prices while ensuring sufficient local supply.[m+6]
CBIC Chairman Vivek Chaturvedi stated that the government will review the special additional excise duty on diesel and ATF every fortnight. This fortnightly review will align the duty with prevailing market rates.Mr. Chaturvedi also estimated a revenue gain of approximately Rs 1,500 crore in the first fortnight from the export tax.However, the government will forgo over Rs 7,000 crore in revenue due to the excise duty cut on petrol and diesel.[thehindu+5]
The reintroduction of the windfall tax creates concerns for investors in companies heavily involved in fuel exports. It highlights the government's priority to manage domestic fuel availability and prices amidst a dynamic global energy landscape.
