New Delhi: The Ministry of Finance on Thursday said it has granted full customs duty exemption on critical petrochemical products till June 30, citing the ongoing conflict in West Asia and the resulting disruption in global supply chains. The ministry described the step as “temporary and targeted relief” to “ensure continued availability of critical petrochemical inputs” and “reduce cost pressures on downstream sectors.”
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The notification covers 40 entries ranging from feedstocks and solvents such as anhydrous ammonia, toluene, styrene, vinyl chloride monomer, methanol, isopropyl alcohol, monoethylene glycol, phenol and acetic acid, to downstream materials including polypropylene, PVC, polystyrene, SAN, ABS, PET chips, polyurethane, epoxy resins, polycarbonates and polyols. The exemption is effective from April 2, 2026 and runs through June 30, 2026.
Several of the items in the list are basic building blocks for everyday industrial products. Toluene is used as a solvent and chemical intermediate, while styrene is widely used to make plastics and rubber for insulation, pipes, automobile parts, food containers and carpet backing. Vinyl chloride monomer is used mainly to make PVC, which goes into pipes, wire and cable coatings and packaging materials.
PTA and monoethylene glycol sit at the heart of polyester manufacturing. PTA is used as a raw material for polyester staple fibres, polyester filament yarn and PET, while ethylene glycol is used to make polyester fibres and antifreeze, and PET is widely used in bottles and food packaging. Linear alkylbenzene is a key detergent feedstock, and toluene diisocyanate is used to make polyurethane products, including foams used in furniture, mattresses, packaging and carpet underlay. Acetic acid is used across plastics, pharmaceuticals, dyes, insecticides, textiles and rubber, and isopropyl alcohol is used as a solvent and antiseptic. Ammonium nitrate is also a base ingredient in commercial explosives and has fertilizer applications.
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The ministry said the exemption is expected to benefit plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components and other manufacturing segments, while also easing pressure on consumers of final products. “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,” said the Finance Ministry.
In practical terms, the duty relief should soften input-cost stress for manufacturers that depend on imported petrochemical feedstocks and intermediates.
However, the Central government's revenue mop-up, which has already been hit by a reduction in excise duty on petrol and diesel, will take a further hit. Addressing the media at an inter-ministerial press briefing on Friday, Sanjay Mangal, Member of the Central Board of Indirect Taxes and Customs (CBIC), said, "The calculated/expected revenue loss arising out of these measures for the period of three months is about Rs 1,800 crore. While we are considering this revenue loss, we have to take into account that this has been calculated on the basis of past trends, and considering the present fluid situation, the exact amount of revenue impact cannot be forecasted with as much accuracy."
Global crude prices have risen by almost 50 percent since the United States and Israel launched military strikes against Iran on February 28, triggering sweeping retaliation from Tehran.
The government had last week slashed excise duty on petrol and diesel by Rs 10 a litre as it looked to shield consumers from the impact of rising global crude prices amid the ongoing war, also imposed an export duty of Rs 21.50 per litre on diesel and Rs 29.50 per litre on Aviation Turbine Fuel (ATF). Excise duty on petrol has been slashed to Rs 3 a litre, while on diesel it is zero currently.