India Slashes Import Duty to Zero on 40 Chemicals, Polymers

Three-month exemption on basic customs duty effective April 2; ammonium nitrate cess also removed

Govt Announces Major Relief

The Ministry of Finance (Revenue Department) has issued two extraordinary notifications in the Gazette of India on April 1, 2026, bringing significant relief to the petrochemical industry. Basic customs duty on 40 key chemicals, monomers, and polymers has been reduced to zero. A separate notification has also zeroed the Agriculture Infrastructure and Development Cess on ammonium nitrate. The exemptions take effect from April 2 and will remain in force until June 30.

Scope of the Exemption

The zero-duty list covers a wide range of raw materials used across multiple industries. These include specialty chemicals, plastic inputs, resin intermediates, and polymer compounds. According to the gazette notifications, the move aims to reduce manufacturing costs and stabilise downstream product prices. The exemption is temporary but carries strong signals for policy support to domestic industry.

Who Benefits Directly

Plastic and polymer manufacturers stand to gain the most from lower input costs. Paint, coating, and resin producers will see immediate reduction in production expenses. Fertiliser and pharmaceutical companies will now access cheaper raw materials. The textile, packaging, and automobile sectors are also expected to receive indirect benefits through lower intermediate goods prices.

Official Statement from Industry Body

Yogesh Mehta, President of the Association of Industries Madhya Pradesh, welcomed the decision. “The central government has taken this step in public interest. Many industries in Madhya Pradesh will benefit directly. This is like a lifeline for the sector,” Mehta said. He added that reduced import costs will boost competitiveness of domestic manufacturing units and keep final product prices under control.

Impact on MSME Segment

Small and medium enterprises (MSMEs) are expected to see special relief from the duty cut. Most MSME units depend heavily on imported raw materials due to limited domestic sourcing options. Lower customs duty will ease working capital pressure and allow smaller players to quote more competitive prices. Industry watchers believe this could help revive demand in downstream markets.

Background and Policy Context

The government has periodically used temporary duty exemptions to manage supply-side inflation and support manufacturing. Similar relief was extended to select chemicals during the post-pandemic recovery phase. However, the current three-month window is shorter than previous interventions. Officials indicated the time limit is designed to assess impact before considering any extension.

What Happens Next

The exemptions will remain operational through the first quarter of the fiscal year. Industry bodies are expected to submit feedback to the revenue department by mid-May. Based on utilisation patterns and price trends, the government may either extend the zero-duty regime or replace it with a concessional rate. Meanwhile, importers and manufacturers are advised to align their procurement cycles within the June 30 deadline.