The Union government on Thursday announced a full customs duty exemption on about 40 petrochemical products until June 30, amid supply disruptions due to the conflict in West Asia.
“This measure has been taken as a temporary and targeted relief in order to ensure continued availability of critical petrochemical inputs for domestic industry, reduce cost pressures on downstream sectors, and safeguard supply stability in the country,” stated the Ministry of Finance.
Among the products for which exemptions were announced are polypropylene, polystyrene, polyols, polybutadiene, styrene butadiene and anhydrous ammonia, according to a notification on Wednesday.
Although India produces some of the petrochemical products locally using liquefied petroleum gas and ethane, it is a net importer of such derivatives, reported Reuters.
Soon after the conflict broke out, the Union government had invoked the Essential Commodities Act, 1955, directing domestic oil refiners to prioritise the production of LPG.
The Centre had on March 4 told all oil refining companies in India to “ensure that propane and butane streams produced, recovered, fractionated or otherwise available with them are utilised for production of LPG”.
This had come amid disruptions in energy supplies to India since the conflict in West Asia broke out on February 28.
Iran has effectively blocked the strategic Strait of Hormuz for most international commercial vessels. About 20% of global petroleum supply passes through the maritime chokepoint.
India imports about 80%-85% of the LPG that it consumes and is the world’s second-largest LPG importer after China.
The March 4 order had put pressure on petrochemical producers, who are grappling with constrained availability of the feedstock, rising prices and higher premiums, according to Reuters.
The exemption granted on Thursday is expected to benefit sectors that depend on petrochemical feedstock and intermediates, including plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components and other manufacturing segments.
The conflict in West Asia began after Israel and the United States launched a joint operation to “degrade the capabilities” of the Iranian government. Tehran retaliated by striking Israel and US military bases in the region, and targeting major cities in other Gulf countries and some ships.
While Israel has been claiming that Iran is close to obtaining a nuclear weapon, Tehran has long maintained that its nuclear programme is for civilian purposes.
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