To ease domestic supply chain pressures and support stable operations in downstream industries including automotive and construction, the Indian government announced on April 2, 2026, a temporary basic customs duty exemption for a range of key petrochemical products.

The measure will be valid for three months until June 30, aiming to provide cost relief for India’s highly import-dependent market.

Coverage and Implementation Rules

The duty exemption covers core polyurethane raw materials such as toluene, TDI, MDI, polyether polyols, and polyurethane systems.

These products are widely used in India’s automotive, building insulation, furniture, and consumer goods sectors.

Domestic production capacity is insufficient, leading to long-term reliance on imports.

 According to the official notice, the exemption applies only to basic customs duty and does not affect existing anti-dumping duties, which will continue to be levied as scheduled on imports from relevant countries.

 During the policy window, eligible imports will receive zero basic customs duty, provided no other trade restrictions are triggered.

Multiple Factors Push Raw Material Prices to Historic Highs

The emergency policy comes as India’s polyurethane raw material market has seen historic price surges.

Following escalating geopolitical tensions in the Middle East, India has become one of the hardest-hit markets, facing compounded pressures on supply and costs:

Soaring feedstock costs: Sharp volatility in international crude oil prices has driven steep increases in upstream chemical feedstocks.

Regional supply disruptions: Unstable supply from traditional major producing regions such as the Middle East has tightened global availability.

Surge in logistics costs: International shipping disruptions have nearly doubled freight costs to India.

China’s policy adjustment: The removal of export tax rebates on polyether polyols and other products starting April 1 has directly impacted cost and supply stability for India’s main sourcing channels.

Affected by these knock-on effects, prices of TDI, MDI, and polyether polyols in India have climbed to record highs over the past month, placing severe cost pressure on downstream manufacturers.

Short-Term Relief Expected, but Actual Effects Uncertain

Market analysts believe the temporary duty exemption will directly reduce landed costs for targeted raw materials, offering short-term breathing room for Indian downstream producers.

However, the actual boost to the market will be highly constrained by the global supply environment.

Major global suppliers, including those in China, South Korea, and the Middle East, are all facing tight feedstock availability, high production costs, and logistics uncertainty.

Although the cost structure for Indian importers will improve, securing incremental supply in the near term remains difficult amid a tight global market.

Industry views note that the three-month duty exemption provides a valuable cost-relief window for India’s polyurethane industry chain.

Whether downstream sectors can benefit substantially will ultimately depend on the pace of global supply recovery and overall production cost trends.

From:ChemNet