India Implements Customs Duty Exemption on Petrochemical Products Amid West Asia Conflict

In response to supply disruptions stemming from the conflict in West Asia, the Indian government has announced a customs duty exemption on around 40 petrochemical products until June 30. This measure aims to ensure the availability of critical inputs for domestic industries and alleviate cost pressures. The exemption is expected to benefit various sectors, including plastics, textiles, and pharmaceuticals. The ongoing conflict has significantly impacted energy supplies, prompting the government to prioritize LPG production. As tensions escalate, the implications for India's petrochemical industry and energy security are profound.

By Narendra Chaudhary Apr 2, 2026, 19:06 IST

Government's Decision on Petrochemical Products

On Thursday, the Indian government declared a complete exemption from customs duties on approximately 40 petrochemical products, effective until June 30. This decision comes in response to supply chain disruptions caused by ongoing conflicts in West Asia.

The Ministry of Finance explained that this initiative aims to provide temporary relief to ensure the steady availability of essential petrochemical inputs for local industries, alleviate cost pressures on downstream sectors, and maintain supply stability across the nation.

Included in the list of exempted products are polypropylene, polystyrene, polyols, polybutadiene, styrene butadiene, and anhydrous ammonia, as detailed in a notification released on Wednesday.

While India does manufacture some petrochemical products using liquefied petroleum gas and ethane, it remains a net importer of these derivatives.

Following the outbreak of conflict, the government invoked the Essential Commodities Act of 1955, instructing domestic oil refiners to prioritize LPG production.

On March 4, the Centre mandated that all oil refining companies in India ensure the utilization of available propane and butane streams for LPG production.

This directive was issued amid significant disruptions in energy supplies to India since the conflict in West Asia escalated on February 28.

Iran has effectively restricted access to the strategic Strait of Hormuz for most international commercial vessels, a crucial maritime route through which about 20% of global petroleum supply flows.

India relies on imports for approximately 80%-85% of its LPG consumption, making it the second-largest LPG importer globally, following China.

The March 4 directive has placed considerable pressure on petrochemical producers, who are facing challenges related to limited feedstock availability, rising prices, and increased premiums.

The customs duty exemption announced on Thursday is anticipated to benefit various sectors reliant on petrochemical feedstock and intermediates, including plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components, and other manufacturing industries.

The conflict in West Asia intensified after Israel and the United States initiated a joint operation aimed at degrading the capabilities of the Iranian government. In retaliation, Tehran has targeted Israeli and US military bases in the region, as well as major cities in other Gulf nations and several commercial vessels.

While Israel asserts that Iran is nearing the development of a nuclear weapon, Tehran insists that its nuclear program is intended solely for civilian applications.