India Ends Petrochemical Import Tax Amid LPG Shortages from Iran War
India has abolished import tax on 40 petrochemical products used in plastics and pharmaceuticals until June 30, invoking emergency powers. This decision follows the government's directive to divert local chemicals for cooking gas (LPG) production due to shortages exacerbated by the Iran war. The move aims to ease cost pressures on downstream industries and consumers, as local petrochemical producers face strained feedstock availability from the LPG diversion.
India has implemented a significant policy change, abolishing import tax on 40 specific petrochemical products, including those used in plastics and pharmaceutical manufacturing. This emergency measure, valid until June 30, was enacted after the government invoked special powers to divert locally produced chemicals towards the production of liquefied petroleum gas (LPG), primarily used as cooking gas. This diversion became necessary to address acute shortages, which were exacerbated by the ongoing Iran war and recent US-Israeli strikes.The decision to grant customs duty exemption is aimed at mitigating rising cost pressures across India's downstream industries, providing crucial relief to manufacturers of plastics and pharmaceutical goods. It also seeks to benefit end consumers amidst persistent global supply chain disruptions. India, while a domestic producer, remains a net importer of such petrochemical derivatives. Critically, India is the world’s second-largest importer of LPG, relying on overseas purchases for approximately 60% of its needs. The government’s order to prioritize LPG production has consequently strained domestic petrochemical producers, who are now grappling with reduced feedstock availability, escalating prices, and higher premiums, impacting their output and the wider Asian plastics and packaging sector.
