Petchem relief to cost Rs 1,800 crore in 3 months: Government

The government on Thursday pegged the revenue loss from the petrochemicals exemption at about Rs 1,800 crore over the next three months, as it rolls out measures to cushion the impact of the West Asia conflict.

The exemptions, effective April 2 till June 30, cover a wide range of key inputs including methanol, styrene, acetic acid and polyvinyl chloride (PVC), along with several polymers and intermediates used across sectors. Ammonium nitrate has also been exempted from the Agriculture Infrastructure and Development Cess for the same period.

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The estimate was shared by Central Board of Indirect Taxes and Customs (CBIC) Member Sanjay Mangal during an inter-ministerial briefing on recent developments in the region.

Officials said the measures are aimed at easing cost pressures on industries heavily dependent on petrochemical inputs, such as pharmaceuticals, paints, textiles and consumer goods, which have been hit by rising crude oil and gas prices amid supply disruptions.

Many downstream sectors, particularly labour-intensive units like textiles, are facing margin pressure due to limited pricing power, with early signs of stress emerging in employment.

The government also presented a broader assessment of the war’s impact across sectors, noting that while petrochemical inflation typically transmits with a lag, it eventually feeds into consumer prices through higher packaging and input costs.

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The temporary duty relief is intended to manage supply-side pressures and limit the broader economic fallout until global supply chains stabilise.