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Morning Edition · Sunday, November 1, 2026Published at 1:14 AM EDT · New York
India scraps its petrol export duty and raises levies on diesel and jet fuel as foreign investors pull $35 billion from Indian stocks
India's securities regulator will soon propose easier compliance rules for foreign investors. In Pakistan, cooking gas sells at twice the official price on the open market, and distributors threaten a strike.
India's government has scrapped the export duty on petrol for two weeks from October 31 and raised levies on exports of diesel and aviation turbine fuel (ATF), Mint reported. New Delhi first imposed these windfall export taxes on diesel and ATF in March and on petrol in May, as tensions in West Asia raised refining margins. The taxes keep part of the fuel produced by Indian refiners in the domestic market and give the state a share of export profits. The latest change favors keeping diesel and jet fuel at home over petrol.
Capital is leaving India for the same reasons. Foreign portfolio investors had withdrawn about 3.08 trillion rupees from Indian equities in 2026 by late October, BW Businessworld reported, citing high crude prices, geopolitical tension and earnings concerns. At the current rate of about 95 rupees to the dollar, that is roughly $32 billion to $35 billion. The Securities and Exchange Board of India (SEBI) is responding. Its chairman, Tuhin Kanta Pandey, said a consultation paper on compliance rules for foreign institutional investors will come within weeks. The paper will look at aligning Indian rules with global standards.
Pakistan shows what happens when official prices fall too far below market prices. Pakistan's Oil and Gas Regulatory Authority (OGRA) raised the official price of liquefied petroleum gas (LPG) by about 15 rupees per kilogram for November. Dawn reports that LPG still sells at twice the official rate on the open market. An industry association has warned of a strike from November 16 over the new LPG policy.
Part of a tracked trend
Oil Importers Ration Through Taxes and Price Caps
As high crude prices persist, large fuel-importing economies will keep using export levies, subsidies and price caps instead of letting prices adjust. That produces unofficial markets, fiscal strain and capital outflows each time oil rises.
What this means
South Asian governments are absorbing the oil shock with export taxes, administered prices and regulatory changes, not by letting prices adjust fully. India's export levies move refining profits from Reliance and other exporters to the state and to domestic consumers. Foreign investors are reacting by leaving. India's rupee and equity markets have become the region's main channel of exposure to higher oil prices. Pakistan's LPG market shows the Austrian point plainly. When the official price is set below the market-clearing price, the result is an unofficial market at double the price and a supplier strike, not cheap gas. The common view treats SEBI's rule changes as a remedy for the outflows. The outflows mainly follow crude prices and US yields, which India cannot control. The likelier outcome over the next few months is more frequent changes to India's export levies as long as Brent stays above $100, and continued foreign selling until crude falls. The read is wrong if foreign investors keep returning even while oil stays high. That would point to valuation and domestic growth outweighing the energy shock.
What to watch
- India's next two-week revision of its fuel export duties, which shows how hard New Delhi is working to keep diesel and jet fuel at home.
- Whether Pakistan's LPG distributors strike on November 16, which would turn the price gap into a supply shortage.
- Daily foreign investor flows in Indian equities after SEBI's consultation paper is published, which will show whether the rule changes affect the outflows.
Observations to monitor, not financial advice.
Synthesized from: Mint (Economy) · Economic Times · Dawn
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