India on Thursday temporarily abolished the import tax on 40 key petrochemicals to provide relief to a range of industries as domestic petrochemical output is now diverted to the production of liquefied petroleum gas (LPG), the primary cooking fuel in the country.
India’s Ministry of Finance said today it is providing full customs duty exemption on critical petrochemical products until June 30, 2026, in light of the war in the Middle East that has upended global oil and petrochemical supply chains.
“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,” the Ministry of Finance said in a statement.
In the early ways of the Iran war, the federal government invoked the so-called Essential Commodities Act, directing domestic refiners to prioritize domestic supply and allocate propane and butane streams toward LPG production.
Most of India’s imported LPG supply has been severely reduced as it needs to transit the Strait of Hormuz. As the government prioritizes LPG and domestic fuel supply, petrochemicals production has declined.
To ease the burden on a number of industries depending on petrochemicals, the government is now waiving the import tax on 40 key petrochemical products.
“The exemption is expected to benefit a wide range of sectors dependent on petrochemical feedstock and intermediates, including plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components and other manufacturing segments,” the Finance Ministry said.
“This will also provide relief to consumers of final products.”
The three-month exemption from import duties is aimed at preventing shortages, lowering input costs for manufacturers, stabilizing consumer goods prices, and supporting export competitiveness.
Across Asia, shortages of naphtha and other key petrochemicals feedstocks due to the Iran war have already forced petrochemicals firms to curb output.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- Chevron Reports “Extensive Damage” at Major LNG Project
- Iranian Drone Sets Kuwaiti Oil Tanker on Fire
- WTI Jumps 51% in a Month on Iran War Supply Shock
