According to people familiar with the matter, India is considering lowering the recently implemented windfall tax as the profits of fuel exporters and oil producers dwindle due to the drop in global crude prices.
The measure, which aims to tax above-average profits on domestic oil production and export shipments of gasoline, diesel, and jet fuel, will be discussed at a meeting on Friday, according to the people, who declined to be identified because the discussions are private. They added that if a cut is decided upon, it could be implemented immediately.
Concerns about a US recession, combined with China’s struggle to exit a crippling period of Covid curbs, have caused a 20% drop in global oil prices in recent weeks. Diesel, gasoline, and aviation fuel margins have collapsed in the last two weeks, squeezing the profits of India’s largest fuel exporter, Reliance Industries Ltd., and oil producer Oil & Natural Gas Corp.
Beginning July 1, fuel exporters will pay approximately $13 per barrel for gasoline and aviation fuel shipments, and $25 for diesel, while crude oil producers will pay a levy of $40 per barrel. Finance Minister Nirmala Sitharaman previously stated that the government would review the levies every 15 days. A spokesman for the finance ministry declined to comment.