NEW DELHI: The Centre has exempted 40 critical petrochemical feedstocks and intermediates from duties to cushion domestic industry from supply disruptions triggered by the Iran war, the finance ministry said on Thursday.
The relief, which will be in place until end-June, covers key inputs such as ammonia used in fertilizer production, a critical component for food security.
The ministry described the move as a “targeted relief” aimed at ensuring the availability of essential petrochemical inputs, easing cost pressures on downstream sectors, and maintaining supply stability amid the ongoing war in West Asia.
“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,” it said.
The revenue implication to government because of the customs duty cut on the 40 petrochemicals is about ₹1,800 crore for a three-month period, said a government official, who spoke on condition of not being named.
The exemption is expected to benefit sectors including plastics, packaging, textiles, pharmaceuticals, chemicals and automotive components, all of which rely heavily on petrochemical inputs. These materials are used in a wide range of products such as pharmaceuticals, paints, adhesives, polyester, disinfectants, detergents, packaging bottles and electronics.
The move also seeks to limit the spillover of the conflict into domestic inflation. Economists have warned that supply disruptions could push up inflation and interest rates globally as trade channels transmit the shock.
India’s retail inflation, measured by the consumer price index (CPI), rose to 3.21% in February from 2.74% in January, according to official data released last month, driven by prices of precious metals, personal care products and some food items. Inflation data for March is due in mid-April.
Lower input costs could also help preserve the competitiveness of domestic manufacturers at a time when global trade flows are being disrupted by the conflict and tariff actions by the US.
The finance ministry, in its February monthly economic review, warned that the war could have a significant impact on growth, inflation, fiscal balances and external accounts, and flagged “considerable downside risks” to its FY27 growth projection of 7-7.4%.
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.
