The Indian government has linked jet fuel prices to global market rates to manage volatility in the aviation sector [1].
This shift aims to shield airlines and consumers from unpredictable global price swings while allowing the state to manage fiscal revenue from fuel exports [2, 3].
As part of these adjustments, the Ministry of Petroleum & Natural Gas said that domestic aviation turbine fuel (ATF) is currently under-recovering by approximately Rs 30 per litre [1]. This gap suggests that the cost of providing fuel domestically exceeds the prices being charged to airlines.
To further regulate the flow of fuel, the government introduced a Special Additional Excise Duty (SAED) on petrol exports [4]. This specific levy is set at Rs 3 per litre [4]. The new excise duty on petrol exports became effective May 16 [4].
Earlier policy changes, which included hikes in export duties for diesel and jet fuel, took effect April 30 [1]. While export duties were adjusted, the government left domestic duties unchanged to avoid immediate price shocks for local consumers [1].
These measures reflect a broader strategy to balance the needs of the domestic aviation industry with the economic realities of the international energy market. By aligning ATF prices with global benchmarks, the government seeks a more sustainable pricing model for the long term [3].
“Domestic aviation turbine fuel (ATF) is currently under-recovering by approximately Rs 30 per litre.”
The move to link aviation turbine fuel to global rates indicates a transition toward a market-driven pricing mechanism in India. The reported under-recovery of Rs 30 per litre highlights the financial pressure on fuel providers, suggesting that future domestic price hikes may be necessary to close this gap. Additionally, the implementation of export duties on petrol and diesel serves as a tool to prioritize domestic supply and stabilize internal costs against global fluctuations.
