Reliance SEZ Refinery Spared New Diesel & ATF Export Taxes

Effective March 26, India has reinstated windfall export taxes on diesel and aviation turbine fuel (ATF). These levies amount to Rs 21.50 per litre on diesel and Rs 29.50 per litre on ATF, with petrol exports remaining exempt. This decision was made against the backdrop of global energy supply disruptions stemming from the Middle East conflict.

However, Reliance Industries' refinery located within a special economic zone (SEZ) will not be subject to these reimposed taxes. A senior government official confirmed that judicial pronouncements have established exemptions for SEZ refineries from such special additional excise duties and additional excise duties.

The government initially introduced windfall taxes in July 2022, withdrawing them in December 2024, and has now brought them back as a special additional excise duty (SAED). This measure is intended to incentivize refiners to focus on meeting domestic demand rather than prioritizing exports.

Reliance operates two refineries in Jamnagar, Gujarat: one for domestic sales and a 35.2 million tonnes per year SEZ unit exclusively for exports. The export tax rates will undergo fortnightly reviews to adapt to fluctuating market conditions.

Analysts suggest the impact on Reliance may be limited, as a significant portion of its diesel and jet fuel production in the current fiscal year comes from its SEZ refinery, which is expected to be exempt. While the new duties are equivalent to USD 36 per barrel on diesel and USD 50 per barrel on jet fuel, the exemption for SEZ volumes could largely offset the financial implications.