New Delhi, April 2 The government on Thursday exempted the import of critical petrochemical products from customs duty for three months until June 30, providing relief to sectors such as pharmaceuticals, chemicals, and textiles, and ensuring supply stability amid the ongoing West Asia crisis.
This "temporary and targeted relief" will cost the exchequer approximately Rs 1,800 crore, but will help ensure price stability, continuity in production and supply chain, CBIC Member (Tax Policy), Sanjay Mangal told reporters at a press briefing.
In a statement, the finance ministry said, in light of the ongoing conflict in West Asia and the consequent disruptions in global supply chains, the government has decided to provide full customs duty exemption on critical petrochemical products until June 30.
Sectors dependent on petrochemical feedstock and intermediates, such as plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components, and other manufacturing segments, will benefit from the duty exemption, which will cost the exchequer Rs 1,800 crore.
"This measure has been taken as a temporary and targeted relief in order to ensure the continued availability of critical petrochemical inputs for the domestic industry, reduce cost pressures on downstream sectors, and safeguard supply stability in the country," it said.
This will also provide relief to consumers of final products.
The goods on which customs duty has been exempted include Methanol, Anhydrous ammonia, Toluene, Styrene, Dichloromethane (methylene chloride), Vinyl chloride monomer, Poly butadiene, Styrene butadiene, and Unsaturated polyester resins.
Disruptions in shipping routes amid the West Asia war have raised concerns over the import of fertilizers, crude oil, and natural gas. India is a major importer of fertilizers and petroleum.
Global crude prices have risen by almost 50 per cent 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 per litre as it looked to shield consumers from the impact of rising global crude prices amid the ongoing war, and 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 per litre, while on diesel it is currently zero.
On Wednesday, the government had allowed SEZ units to sell up to 30 per cent of their export turnover in the domestic market. This is a one-time relief window to ease out the pressure faced by existing units in SEZ due to global trade disruptions.
Asked about the revenue impact of the proposal, Mangal said it is difficult to analyze the revenue implication as it is not known how much the SEZ units will sell in the domestic market.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said the import duty exemption is a timely intervention aimed at containing inflationary pressures arising from the prevailing geopolitical situation.
"This measure will also play a crucial role in supporting export competitiveness, as the prices of these key industrial inputs have risen sharply in recent months, significantly increasing production costs for exporters. By easing the input cost burden, the duty reduction will help exporters maintain pricing competitiveness in global markets, honor existing contracts, and mitigate margin pressures during this volatile period," Sahai said.