In response to escalating tensions in West Asia and disruptions to global supply chains, the government on Thursday waived customs duty on several critical petrochemical items till June 30, offering temporary relief to domestic industry facing rising input costs.
Officials said the three-month waiver is expected to result in a revenue shortfall of around Rs 1,800 crore.
The measure has been taken as a temporary and targeted relief to ensure continued availability of critical petrochemical inputs, reduce cost pressures on downstream sectors, and safeguard supply stability. It covers around 40 key petrochemical feedstocks and intermediates, including methanol, anhydrous ammonia, toluene, styrene, vinyl chloride monomer, acetic acid, and polymers such as PVC and polyurethanes.
India remains a net importer of petrochemical derivatives, though it also produces them domestically using LPG, naphtha and ethane. Sectors such as plastics, packaging, textiles, pharmaceuticals, chemicals and automotive components are expected to benefit, with the move aimed at supporting production and easing cost pressures.
The ministry described the move as a “targeted relief” to maintain supply stability and ease cost pressures amid the ongoing West Asia conflict.
Global Volatility
At an inter-ministerial briefing, Sanjay Mangal, Member (Tax Policy), CBIC, said the exemption aims to address supply concerns, adding that the estimated revenue loss of Rs 1,800 crore; however, this figure is based on past trends and may vary given the current crude oil situation, making the exact revenue impact difficult to predict. The decision was taken after widespread consultations with various ministries.
“It is expected that the move will ensure more price stability for these sectors, improve supply chains and help in continued production of these critical products,” Mangal added.
The decision follows disruptions in shipping routes and tightening supplies due to the ongoing conflict, which have pushed up prices of crude oil and related feedstocks. Many industries dependent on these imports risk higher production costs and supply constraints.
Margin Pressure
Industry executives said the decision comes at a critical time. Arun Shukla, President & Director, JK Lakshmi Cement Ltd, said, “The government’s move… comes as a relief for industry. At a time of global price volatility, this should improve input cost stability. For cement, polymers used in packaging could see easing, helping improve dispatch efficiencies and cushioning external cost pressures.”
Amitt Nenwani, Managing Director, Shivtek Spechemi Industries Ltd, said,
“The waiver is a timely intervention, neutralising cost pressures from Middle East disruptions. It ensures manufacturing momentum remains unhindered while supporting production stability, downstream value chains, and long-term capacity building.”
Industry bodies, however, flagged operational concerns. Dr Kalyan Goswami, Director General, Agro Chem Federation of India (ACFI), said: “We appreciate the government’s proactive measures to support industrial stability and ensure uninterrupted supply of agri inputs. However, clarity is needed on duty benefits for bonded cargo, along with inclusion of key chemicals to maintain operational stability.” The federation added that inventory levels could be exhausted by August–September 2026, with delays in vessel arrivals already affecting supplies.
“The industry strategy of utilising forward contracts to rapidly build inventory is resulting in hasty buying behaviour, exerting pressure on supply chains. Inventory levels are projected to be exhausted by August-September 2026, while vessel delays are worsening the situation. Extending the exemption into the next quarter is necessary to mitigate supply disruptions.”
Separately, the government last month cut import duties on petrol and diesel and imposed export taxes on jet fuel and diesel to ease pressure on oil retailers and protect consumers from rising fuel prices while ensuring adequate domestic supplies.