The government could also reduce import duties and regulate exports if necessary to ensure adequate domestic supplies of essential products whose availability is restricted by the war, said Lav Agarwal, Director General of Foreign Trade. He said the government is examining reducing import duties on critical raw materials and other essential goods.
Sanjay Mangal, Central Board of Indirect Taxes and Customs member for tax policy said the tax cuts will cost the exchequer about Rs 1,800 crore but would help ensure price stability, continuity in production and supply chain. Sectors dependent on petrochemical feedstock and intermediates such as plastics, packaging, textiles, pharmaceuticals, chemicals, automotive components, and other manufacturing segments will benefit from the duty exemption.
“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,” according to a finance ministry statement. This would also provide relief to consumers of final products, it said.
Goods which received the customs duty exemption include methanol, anhydrous ammonia, toluene, styrene, dichloromethane (methylene chloride), vinyl chloride monomer, poly butadiene, styrene butadiene, and unsaturated polyester resins. Disruptions in shipping routes due to the war has sparked concerns of continued imports of fertiliser, crude oil, and natural gas. India is a major importer of fertilisers and petroleum.
Global crude prices have surged nearly 50% since the US and Israel launched military strikes against Iran on February 28, triggering sweeping retaliation from Tehran.
The government had last week cut excise duty on petrol and diesel by ₹10 a litre as it looked to shield consumers from the impact of rising crude prices. It also imposed an export duty of ₹21.5 per litre on diesel and ₹29.5 per litre on jet fuel.