India Caps Aviation Fuel Prices and Reduces Export Duties

The Government of India intervened in the energy market throughout April and May 2026 to shield the domestic aviation sector from extreme price volatility caused by a West Asia crisis. On April 1, the government capped domestic Aviation Turbine Fuel (ATF) price increases at 25%, limiting the hike to approximately Rs 15 per litre. This action prevented a potential price spike of over 100% following the closure of the Strait of Hormuz.

On May 1, the Ministry of Finance further reduced export duties on ATF from Rs 42 to Rs 33 per litre and slashed diesel export duties from Rs 55.5 to Rs 23 per litre. These levies were initially introduced on March 27, 2026, to prioritize domestic fuel availability while crude oil prices reached a four-year high of USD 126 per barrel due to military strikes between the United States, Israel, and Iran.

While domestic carriers received relief, international routes remained subject to global benchmarks. In response to the pricing shifts, IndiGo revised its fuel surcharges. The Federation of Indian Airlines has since requested additional government support to ensure operational sustainability. Parallel to these fiscal changes, the Ministry of Petroleum and Natural Gas expanded the definition of ATF to permit blending with synthetic fuels to meet current industry standards.