NEW DELHI: The Center has exempted 40 critical petrochemical raw materials and intermediates from duty to cushion the domestic industry from supply disruptions caused by the war in Iran, the finance ministry said on Thursday.
The relief, which will run until the end of June, covers key inputs such as ammonia used in fertilizer production, a critical ingredient for food security.
The ministry described the move as “targeted assistance” aimed at ensuring the availability of essential petrochemical inputs, easing cost pressures on downstream sectors and maintaining supply stability amid the ongoing war in West Asia.
“This measure has been taken as a temporary and targeted relief to ensure continued availability of critical petrochemical inputs to the domestic industry, reduce cost pressures on downstream sectors and ensure supply stability in the country,” it said.
The exemption is expected to benefit industries including plastics, packaging, textiles, pharmaceuticals, chemicals and automotive components, all of which are heavily dependent on petrochemical inputs. These materials are used in a wide variety of products such as pharmaceuticals, paints, adhesives, polyester, disinfectants, detergents, packaging bottles and electronics.
The move also seeks to limit the conflict’s spillover into domestic inflation. Economists have warned that supply disruptions could raise inflation and interest rates globally as trade channels transmit the shock.
India’s retail inflation, as measured by the consumer price index (CPI), rose to 3.21% in February from 2.74% in January, according to official data released last month, driven by prices of precious metals, personal care products and some food items. Inflation data for March are available in mid-April.
Lower input costs could also help keep domestic producers competitive at a time when global trade flows are disrupted by conflict and US tariff measures.
In its February monthly economic survey, the Treasury warned that the war could have a significant impact on growth, inflation, the fiscal balance and external accounts, and flagged “significant downside risks” to its FY27 growth projection of 7-7.4%.
Separately, the government last month cut import duties on petrol and diesel and imposed export taxes on jet fuel and diesel to ease pressure on oil retailers and protect consumers from rising fuel prices while ensuring sufficient domestic supplies.
