Last Friday, the government took investors by surprise. It announced levy of export duty on petrol, diesel and aviation turbine fuel.
Besides taxing exports, the government also announced the imposition of windfall tax on gains made by domestic refineries.
A cess of Rs 23,250 per tonne on domestic crude production was also imposed. The move clipped wings of upstream oil companies with shares of Reliance Industries declining over 7%. Other related stocks fell in the range of 3.5-15%.
According to independent market analyst, Ambareesh Baliga, “The measure will set the precedence for such taxes going ahead and is surely negative for refiners as well as explorers. A question which arises is that how will the industry get compensated when the prices are not remunerative?”
