Critical petrochemical products get full customs duty exemption

The exemption is expected to be helpful for sectors dependent on petrochemical feedstock and intermediates such as plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components, and other manufacturing segments. “This will also provide relief to consumers of final products,” the Ministry said.

The customs duty exemption for petrochemical products for three months is expected to have a revenue loss of Rs 1,800 crore for the government, an official said.

Since the global geopolitical and economic situation is dynamic, the revenue implication figure is not final and needs to be seen in that context, the official added.

About 40 petrochemical products have been given the customs duty exemption including anhydrous ammonia, toluene, styrene, dichloromethane, methanol, acetic acid, ammonium nitrate, polypropylene, polyvinyl chloride, polyols, polycarbonates, polyurethanes, and poly butadiene, styrene butadiene.

With an increase in crude oil prices following the Israel-US strikes on Iran on February 28 and the continuing conflict, industries have faced cost pressures and sourcing gaps for ensuring smooth supplies for production.

From shortage of gas availability for car paint shops to technical grade urea in the automotive value chain to increase in price of sulphuric acid — a critical input in fertilisers — to glass and other packaging materials, the supply chains for many industries have been disrupted.

Domestic petrochemical production has been hit due to the government-mandated diversion of important feedstock streams — butane and propane — to maximise the production of LPG, a critical fuel on which crores of Indian households depend. Moreover, the government has also restricted natural gas supplies to petrochemical plants and refineries in a bid to ensure that high-priority sectors get adequate natural gas supplies. As much as 90% of India’s LPG imports and around 60% of liquefied natural gas imports came from West Asia via the Strait of Hormuz.

The Centre has been taking a series of measures to address the supply-chain bottlenecks.

On Friday, the Centre had increased the allocation of commercial LPG to states and union territories by another 20%, bringing the total to 70% of the pre-crisis level, to meet the requirements of industries.