New Delhi, April 2 Indian businesses said on Thursday that the government's move to exempt the import of critical petrochemical products from customs duty for three months until June 30 is a timely response to supply chain disruptions arising from the West Asia conflict, which will provide relief to sectors such as textiles, packaging, and pharmaceuticals.
Chandrajit Banerjee, Director General of CII, said, "The Government of India's decision to grant full customs duty exemption on 40 critical petrochemical products until June 30, 2026, is a timely and pragmatic response to the supply chain disruptions arising from the ongoing conflict in West Asia."
Downstream sectors such as pharmaceuticals, paints, textiles, and toys, many of which are labor-intensive SMEs, are facing rising input costs and limited pricing power, he said.
"The duty exemption will provide immediate relief to sectors such as textiles, packaging, and pharmaceuticals that rely heavily on key intermediates including PTA, methanol, and acetic acid. It will also help moderate cost pressures, support supply stability, and ease inflationary trends," Banerjee stated.
He also welcomed the government's decision to extend the Rebate of State and Central Taxes and Levies (RoSCTL) Scheme, saying it will provide timely support to exporters in the apparel and made-ups sector.
The PHDCCI said that the measure directly lowers input costs for downstream industries by removing customs duty, thereby reducing the landed prices of imported raw materials and intermediates. This cost reduction is expected to lead to margin protection, particularly for sectors with high raw material intensity.
"For example, in plastics, textiles, and packaging, petrochemical is used as a raw material input, and accounts for a significant share of total production costs. A reduction in input prices will lead to a substantial improvement in operating margins (EBITDA), especially for firms operating under fixed-price contracts," said Rajeev Juneja, President of PHDCCI.
Additionally, the exemption can improve working capital efficiency by lowering procurement costs. It may also enhance capacity utilization, as lower input costs incentivize higher production levels, further supporting margin recovery through operating leverage, he added.
Apparel Export Promotion Council (AEPC) Chairman Dr. A Sakthivel said, "The government's timely decision to exempt customs duty on critical petrochemical inputs will provide much-needed relief to the textile and apparel sector, which is heavily dependent on synthetic fibers and intermediates. This move will help stabilize input costs, ensure continuity in production, and support export competitiveness at a time when global supply chains are facing significant disruptions due to the West Asia crisis. We believe this proactive step will cushion the industry against volatility and safeguard growth momentum."
Sanjay K Jain, former Chairman of the Confederation of Indian Textile Industry (CITI) and Managing Director of TT Ltd, commended the Government for acting so quickly and taking such a bold decision. "We are facing a major supply chain crisis on both the price and availability front, and it is of utmost importance to obtain raw materials from other nations and build our stockpile for the industry," he said.
Jain argued that India as a country needs to remain competitive in these trying times when our competitors like Vietnam, Bangladesh, Sri Lanka, and Pakistan have duty-free access to inputs needed for exports – otherwise, we will fall further behind as an industry, which is already battered by the US tariff shock, high freight, and lead times, etc.
The government on Thursday exempted the import of critical petrochemical products from customs duty for three months until June 30, to ensure supply stability and provide relief to consumers of final products amid the crisis in West Asia.
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.
In a statement, the finance ministry said that 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.