The Indian government has more than halved levies on the export of diesel as the country reported its largest ever trade deficit in July.
Taxes have been reduced to five rupees (six cents) a liter, down from 11 rupees previously, in order to encourage shipments of the commodity. Bloomberg noted this marks the second time these taxes have been decreased since they were initially implemented on July 1st.
It follows the release of new figures that revealed the gap between exports and imports widened to $31.02 billion in July, up from $26.18 billion in June. Higher prices for commodities and a weak rupee were said to be among the main contributors to this.
Overall, imports to the country were up by 43.59 percent last month compared with a year ago, while exports remained mostly flat, recording a 0.76 percent drop. However, the value of petroleum products exports fell to $5.4 billion, down from $8.7 billion in June.
Abhishek Gupta, India economist at Bloomberg, commented: "The government slapped an export tax on the products at the start of July, along with a windfall tax on domestically produced crude, which likely drove some shift in supply to the domestic market. A drop in prices was also likely at play."
The figures come shortly after new duties were also imposed last month on gold imports. These were introduced in order to discourage the purchase of these commodities from overseas and help rein in India's trade deficit. Last month, the value of gold imports totalled $2.37 billion.