India scraps petchem import duties temporarily as oil disruptions squeeze domestic supply

India has moved to temporarily eliminate import duties on key petrochemical products, seeking to stabilise domestic availability amid severe supply disruptions triggered by ongoing oil market turmoil.

In a 1 April 2026 notification, the Ministry of Finance confirmed that duties on a broad range of chemical and petrochemical imports will be reduced to 0% from 2 April through 30 June 2026. The measure covers around 40 line items across multiple HS codes, including major polymer grades such as PE, PP, polystyrene, ABS, and PVC. All previously attracted import duties of 7.5%.

The policy shift underscores the mounting strain on India’s petrochemical sector following the Iran war and the closure of the Strait of Hormuz. With the country reliant on imports for nearly 87% of its crude requirements, feedstock shortages have intensified, disrupting downstream production chains.

Compounding the situation, the government had earlier mandated LPG prioritisation for household consumption, effectively restricting its use as a petrochemical feedstock. The directive has forced widespread rate cuts and partial shutdowns across domestic plants, sharply curtailing local polymer output.

The temporary duty waiver is expected to incentivise imports and ease supply tightness, while enabling refiners to prioritise transport fuel production over chemical feedstocks. However, the effectiveness of the measure may be constrained by limited overseas availability. Regional supply remains tight, with multiple Asian producers declaring force majeure amid the same upstream disruptions.

While the tariff relief offers short-term breathing room, India’s ability to secure incremental volumes will hinge on global supply conditions. With regional outages persisting, competition for spot cargoes is likely to intensify, keeping polymer markets firm despite demand-side headwinds.

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