Finance ministry order to hit oil product exports
Indian Oil, Bharat Petroleum and Hindustan Petroleum are resisting a finance ministry directive to plug a loophole in the taxation system on petroleum products.
On 6th September, the finance ministry ordered that excise duty (tax) must be paid on all oil products leaving a refinery including for export. Exports are exempt from excise duties.
Behind the move is a belief at the finance ministry that some oil companies are clandestinely selling products meant for export in the domestic market. In its directive, the ministry says exports should now be made directly from refineries to get the tax exemption.
Worried at the impact on legitimate exports, IOC, BPCL and HPCL have protested to the oil ministry. Worst hit are in-country refineries, particularly Indian Oil, which does not have a single coastal refinery from where products can be directly exported.
In 2003-04, India exported $3.5bn worth oil products.