Centre's Duty Waiver on Chemicals to Aid Gujarat's Industry Amid Global Volatility
In a timely intervention for one of India's most chemical-intensive industrial states, the Centre's decision to waive customs duty on a wide basket of chemicals and petrochemicals from April 2 to June 30 is expected to bring short-term relief to Gujarat's manufacturing ecosystem. This move comes as the state grapples with elevated input costs amid global energy volatility and supply chain disruptions.
Exemption Details and Key Feedstocks
The exemption, which removes an effective 8.25% import duty, covers critical feedstocks essential for Gujarat's industrial value chains. These include methanol, acetic acid, vinyl chloride monomer (VCM), purified terephthalic acid (PTA), monoethylene glycol (MEG), phenol, styrene, and a range of polymers such as polyethylene, polypropylene, PVC, and ABS. These chemicals are core inputs for Gujarat's chemical, plastics, and textile industries, all of which have faced significant margin pressures in recent months.
Industry Perspectives on Cost and Availability
Bhupendra Patel, chairman of Chemexcil Gujarat, highlighted that while the duty reduction will help manufacturers lower input costs, the primary concern remains availability. "The closure of the Strait of Hormuz has led to a marked shortage of chemicals. We expect the war-related uncertainty to ease so that more vessels can reach Indian ports," he said. Industry players note that the duty waiver will lower landed costs of imported intermediates, particularly for companies reliant on global supply chains for solvents and bulk chemicals.
Ankit Patel, vice chairman of Chemexcil, added, "Almost all basic chemicals will see a 10% drop in prices, which will lower production costs. The decision is aimed at protecting Indian industry from sudden price spikes triggered by the West Asia conflict." However, the sector continues to struggle with limited PNG supply, impacting production efficiency.
Immediate Benefits for Key Sectors
Nilesh Damani, former vice president of the Gujarat Dyestuffs Manufacturers' Association, emphasized the immediate benefits. "The duty exemption on essential feedstocks such as methanol, toluene, and styrene will immediately reduce procurement costs. These chemicals are widely used as core raw materials in pharmaceuticals, plastics, polymers, and textiles, all of which have a strong manufacturing base in Gujarat," he stated. Damani further noted that lower import costs will help ease margin pressure, support production planning, and offer stability after months of steep increases in raw material prices.
Impact on Polyester and Plastics Industries
The move is particularly significant for Gujarat's dominant polyester and man-made fibre (MMF) segment, which heavily relies on PTA and MEG. Rahul Shah, co-chair of the GCCI textile committee, pointed out that raw material prices for dyes and chemicals have surged by 70–80%. "The duty cut on input chemicals and polymers will have little impact on the total production cost — and that too only if traders pass on the benefit. The real challenge for industries currently is to keep production going, irrespective of costs," he remarked.
Additionally, the inclusion of key polymers such as polyethylene, polypropylene, PVC, and polystyrene is expected to help soften raw material costs for the plastics and packaging industry, providing further relief to Gujarat's diverse manufacturing base.
