Raghuram Rajan wants windfall tax on Russia-fuelled refiners to support Indian exporters hit by US tariffs
A windfall tax on refiners like Reliance Industries, Nayara Energy and Indian Oil can support exporters struggling under 50% US tariffs, Raghuram Rajan says.
India should consider a windfall tax on refiners benefiting from discounted Russian crude to support exporters hit by 50% US tariffs, according to Raghuram Rajan.
“We need to ask who benefits and who is hurt,” the former RBI governor told India Today in an interview on 27 August. “Refiners are making excess profits, but exporters are paying the price through tariffs.”
“Do they still make those excess profits? Should we take some of those profits and benefit some of the exporters who are being hurt by the fact that they’re buying oil from Russia.”
Later, Rajan took to LinkedIn to express his views on a windfall tax.
“Why not impose a windfall profit tax on our refiners proportional to the Russian oil they buy, and transfer it to our small and medium exporters? That will ensure those in India who benefit from Russian oil also pay for it instead of letting others pay.”
Indian refiners—led by Reliance Industries Ltd. and Nayara Energy Ltd.—are likely to increase Russian oil purchases by 10-20%, or 150,000-300,000 barrels per day, in September, Reuters reported on Thursday (28 August 2025), citing traders familiar with preliminary purchase data.
Russia is likely to cut prices to sell more crude oil because they cannot process as much in refineries that were damaged by Ukraine’s drone attacks. Without India, Russia would struggle to maintain exports at existing levels. That would cut oil export revenues that finance the Kremlin’s budget and Russia’s continued war in Ukraine.
Windfall Tax
To be sure, India has in the past imposed windfall levies on oil producers and temporary duties on refined fuel exports when global crude prices surged. Rajan’s proposal goes a step further by directly linking the gains of refiners to relief for exporters.
Supporters argue such a move would create a fairer burden-sharing mechanism: refiners profit from cheap crude, while labour-intensive industries that employ millions get shielded from trade shocks.
However, the idea is not without complications. India’s oil refiners are significant foreign exchange earners. Any new levy risks denting their profitability and discouraging Russian oil imports—a key pillar of India’s energy security.
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Industry executives also point out that calculating “excess profits” is administratively complex, given fluctuating refining margins and varied global benchmarks.
