India Announced A Substantial Hike In Windfall Tax On Air Turbine Fuel (ATF) Oil, Crude Oil, And High-Speed Diesel

Windfall Tax: On Friday, the government declared a significant spike in the windfall tax for air turbine fuel (ATF) oil, and crude oil, as per the official announcement.

According to a government notification, Crude oil's Windfall gain tax rose from INR 1900/tonne to INR 5050/tonne. On ATF, it nearly doubled from INR 3.5/Litre to INR 6/ litre.

Considering the spike in windfall tax, the extra export duty on diesel was also increased, but no differences in the prices of petrol. The added export duty on diesel is currently hiked to INR 7.50 per litre from INR 5/litre while increasing the windfall tax on ATF from INR 1.5 to INR 4.5 per litre, according to the notification.

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India, the largest consumer and importer of oil in the world, bought Russian crude barrels at a price cap well below USD 60 as agreed by the West.

In July, the country set a windfall tax on producers of crude oil as well as levies on gasoline, diesel and aviation fuel exports following the move of private refiners who aimed at overseas markets in order to gain from strong refining margins rather than trading at lower-than-market prices in the nation.

The Demand For Fuel In India Persists In Declining In August As The Monsoon Sets In

New Delhi: The demand for diesel in India dropped again for the second month as the monsoon season began chipping away from consumption in crucial sectors, including agriculture, as per the data by the preliminary industry. The demand for diesel and petrol fell on a month-on-month basis in July. Whilst the consumption of petrol was nearly flat during the first half of August, diesel, the most extensively employed fuel in the nation-witnessed a drop in demand of 11.2 percent between August 1-15 from 3.17 million tonnes to 2.82 million tonnes during the same time of last month.

The monsoon's arrival and intensity burden the demand for diesel in the nation, and consumption conventionally is lower during July-September compared to that of April-June. The monsoon season limits mobility as well as demand within the farm sector, which employs diesel in trucking and irrigation pumps, which also decreases along with the start of the rainy season.

The demand for diesel was, however, higher by 32.8 percent year-on-year on the back of stiff economic growth and a fairly low baseline during the same period in 2021, while COVID's second wave influenced the economy.

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Diesel Consumption was higher by 58.2 percent compared with the 1.78 million tonnes demand between August 1-15 in 2020. As per data, compared to pre-COVID August 2019, it was 23 percent higher.

Sales of petrol inched to 1.29 million tonnes, up from 0.8 percent during the first half of August in comparison to 1.28 million tonnes of consumption during the same time last month.

In August 2021, the consumption was higher by 30.6 percent and 43.4 percent higher compared to the first fortnight of August 2020. It was more than 36 percent compared to pre-COVID August 2019.

In June, the auto fuel demand was helped by a boost in summer travel to areas with colder temperatures in order to flee from the heat and vacations at educational institutions during the annual breaks. Subsequently, it plunged in July and, more recently, in August.

As the aviation sector reopens, the total passenger traffic (including domestic and international) in India at airports closed to the same levels as pre-COVID-19.

Consequently, the demand for air turbine fuel (ATF) oil rose to 2,48,100 tonnes by 42.2 percent between August 1 to 15 in comparison to year-on-year. In August 2020, it was higher by 121 percent but lower by 18 percent compared to pre-COVID August 2019. Also, month-on-month, sales dropped by 0.75 percent.

With robust financial growth of 7.1 percent, the oil demand in India has been increasing at a steady pace since the country relaxed the pandemic lockdowns.

On March 25, 2020, the government set a nationwide lockdown to control coronavirus, which ceased mobility and crippled business and was relaxed after two months.

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The sales for cooking gas LPG were up by 8.19 percent year-on-year in the first half of August to 1.14 million tonnes.

The consumption of LPG was higher by 15.3 percent during August 2020 and 5.5 percent higher in August 2019.

Also, month-on-month demand dropped by 7.8 percent in contrast to the 1.24 million tonnes of LPG consumption in the first half of July, as per data.

As per Procurement Resource, the article concludes that India made an announcement recently stating a hike in the windfall tax for air turbine fuel (ATF) oil, and crude oil, as per the official announcement. Furthermore, the fuel demand in India kept declining in August as the monsoon set in, chipping away from consumption in crucial sectors, including agriculture, as per the data by the preliminary industry.