The Indian government has announced a ‘full customs duty exemption’ for dozens of products derived from oil and natural gas amid the escalating West Asia conflict. The temporary measure will remain in place till June 30 to ensure continued availability of critical petrochemical inputs.

“This measure has been taken as a temporary and targeted relief in order to ensure continued availability of critical petrochemical inputs for domestic industry, reduce cost pressures on downstream sectors, and safeguard supply stability in the country,” read an official PIB update.

The Finance Ministry added that the exemption would benefit a wide range of sectors that were dependent on petrochemical feedstock and intermediates — including plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components and other manufacturing segments. It will also provide relief to consumers of final products.

What are the exempted products?

According to an official communique from the Finance Ministry, exempted items include petrochemical inputs such as anhydrous ammonia, methanol, toluene, styrene, vinyl chloride monomer, monoethylene glycol, phenol, acetic acid, and purified terephthalic acid. Several polymer categories have also been covered under the exemption, including polyethylene, polypropylene, polystyrene, polyvinyl chloride, polyethylene terephthalate chips, and engineering plastics like acrylonitrile-butadiene-styrene and polycarbonates. Speciality chemicals and intermediates such as epoxy resins, polyurethanes, formaldehyde derivatives, and polyols have also been included in the exemption list.

The Strait of Hormuz closure and damage to energy facilities across the Gulf region has created a multi-pronged stress test for India. New Delhi is a net importer of such ⁠petrochemical derivatives, though ⁠it also produces them domestically using feedstocks such as liquefied petroleum gas, ⁠naphtha, ‌and ethane.

The government had invoked the Essential Commodities Act soon after war broke out and directed all refineries to “divert 100% of propane and butane streams away from petrochemical production and toward LPG”. But the ⁠shift has strained petrochemical producers — leaving many grappling with tighter feedstock availability, rising prices ‌and higher premiums. Plastics and packaging manufacturers across Asia are currently facing surging premiums that ​are hitting output at petrochemical plants.