Customs Duty Relief Ending June may be Extended to Sept

Key Highlights

· An inter-ministerial panel will meet next week to review customs duty exemptions on critical raw material imports.

· The government is considering extending the duty waiver on 40 petrochemical products beyond 30 June 2026.

· Industries such as pharmaceuticals, steel, chemicals, textiles, auto components, and packaging are seeking continued or expanded relief.

· Fresh import duties are also being considered on certain electronics products where domestic manufacturing capacity exists.

Why the Review Is Important

· The duty exemptions were introduced on 2 April 2026 as a temporary measure to counter supply chain disruptions caused by the West Asia conflict.

· The exemption currently covers 40 petrochemical feedstocks and polymers used across multiple industries.

· The relief is estimated to cost the government about ₹1,800 crore in forgone customs revenue.

Products Covered Under the Existing Exemption

Key items currently enjoying zero customs duty include:

· Polypropylene

· PVC (Polyvinyl Chloride)

· Methanol

· Anhydrous Ammonia

· Polycarbonates

· Acetic Acid

· Toluene

· Styrene

These products are widely used in:

· Plastics and packaging

· Pharmaceuticals

· Textiles

· Chemicals

· Automobile components

· Electronics manufacturing

Major Issues Before the Panel

1. Extension of Petrochemical Duty Relief

· The government is evaluating whether to extend the exemption until September 2026.

· The move would help industries facing higher input costs due to global supply disruptions.

2. Fresh Relief for Other Sectors

Industries requesting additional duty concessions include:

· Pharmaceuticals

· Steel

· Ceramics

· Diamond polishing

· Polyester textiles

· Specialty chemicals

· Flexible packaging

· Auto components

Electronics Sector May Face New Duties

· The panel is also considering imposing fresh import duties on selected electronics products and components.

· The objective is to support the Make in India initiative and protect domestic manufacturers.

· Electronics imports reached $116.2 billion in FY26, exceeding gold imports for the first time.

Industry Impact

Pharmaceuticals

· Lower duties on key chemical inputs and APIs could help control medicine production costs.

· Industry bodies have welcomed the existing exemptions.

Auto Components

· Relief on petrochemical-based inputs such as plastics and polymers could reduce manufacturing costs.

Chemicals and Packaging

· Continued exemptions would ease raw material cost pressures and support supply chain stability.

Steel Sector

· Industry seeks relief on critical raw materials amid global supply uncertainties.

Nuclear Power Sector Gets Additional Relief

· The Finance Ministry has granted retrospective customs duty exemption on imports used for nuclear power generation between 1 April 2019 and 31 January 2026.

· The measure is expected to lower project costs and benefit nuclear equipment suppliers.

Potential Beneficiaries

Companies that may benefit from extended duty relief include:

· Aarti Industries

· SRF Limited

· Sun Pharmaceutical Industries

· Cipla

· Dr. Reddy's Laboratories

· Samvardhana Motherson International

· Dixon Technologies

Conclusion

The upcoming review is a significant trade policy decision that could shape input costs and competitiveness across several major sectors. While the government is considering extending relief for critical imports to support industry, it is simultaneously exploring higher duties on select electronics imports to encourage domestic manufacturing and strengthen the Make in India initiative.

[ABS News Service/13.06.2026]

An inter-ministerial panel will meet next week to decide on extending India’s war-linked customs duty relief on critical raw material imports, with petrochemicals likely getting a September reprieve, fresh relief under discussion for pharma and steel, and new duties being considered on locally-made electronics.

Key Takeaways

· The customs duty exemption on 40 critical petrochemical products, set to expire June 30, is under active review, the panel is expected to discuss a possible extension to September 2026, though no decision has been confirmed.

· CBIC member Sanjay Mangal, during the April 2 inter-ministerial briefing, referred to government estimates suggesting that the three-month petrochemical duty exemption could cost nearly ₹1,800 crore in foregone customs revenue.

· The government is examining whether duty relief on petrochemicals used for plastics and pharmaceutical goods should continue beyond June 30, with a senior commerce ministry official confirming the review is underway as per Business Standard.

· The inter-ministerial panel will also take up duty cut requests from pharma, steel, ceramics, diamond polishing, polyester textiles, specialty chemicals, flexible packaging, and auto components.

· The same panel is considering imposing fresh import duties on select electronics where domestic manufacturing capacity already exists, a direct Make in India protection move.

Why June 30 Is the Date Every Manufacturer Is Watching

In a gazette notification issued on April 1, 2026, the Ministry of Finance granted a full customs duty exemption on 40 specified petrochemical feedstocks and polymers, effective from April 2 to June 30, 2026, describing it as a “temporary and targeted relief” to counter supply chain disruptions caused by the ongoing conflict in the Middle East.

That deadline expires in days. India is now considering extending customs duty exemptions on select petrochemical imports beyond June 30 as it assesses the needs of domestic industries that rely on such products as key inputs. The inter-ministerial panel, which has already held 20 meetings since the West Asia conflict began, will meet next week to settle the question.

What the April Exemption Covered

The Finance Ministry exempted a total of 40 goods from customs duty, including methanol, anhydrous ammonia, toluene, styrene, dichloromethane, and vinyl chloride monomer, among others. The exemption was expected to benefit sectors dependent on petrochemical feedstock and intermediates, plastics, packaging, textiles, pharmaceuticals, chemicals, and automotive components.

Petrochemical Product	Primary Use	Normal Customs Duty	Duty Status
Polypropylene	Packaging, auto parts, textiles	7.5%	Zero till June 30
Polyvinyl Chloride (PVC)	Construction, pipes, packaging	7.5%	Zero till June 30
Anhydrous Ammonia	Fertiliser, pharma inputs	5%	Zero till June 30
Methanol	Chemicals, pharma, fuel blending	5%	Zero till June 30
Polycarbonates	Electronics, auto, medical	7.5%	Zero till June 30
Acetic Acid	Pharma, textiles, chemicals	5%	Zero till June 30
Toluene / Styrene	Chemicals, plastics, coatings	2.5–5%	Zero till June 30

Source: Ministry of Finance Gazette Notification, April 1, 2026; CBIC

Three Items on the Panel’s Agenda

A senior government official told ET that the meeting will cover three specific areas, extension of existing relief, fresh relief on more industrial inputs, and new duties on electronics where India is self-reliant.

1. Extending petrochemical relief — probable but not confirmed

The petrochemical extension to September is the most consequential near-term decision. A senior commerce ministry official indicated the government is examining whether the relief should continue beyond the current deadline, telling Reuters that India will consider extending import tax exemptions on petrochemicals used for plastics and pharmaceutical goods beyond June 30 to help local industries. However, the panel review is still pending, and the outcome is subject to assessment of supply conditions and revenue impact.

2. Fresh duty relief for pharma, steel, and more

Beyond petrochemicals, industries formally requesting fresh duty cuts include ceramics and diamond polishing, polyester textiles, specialty chemicals, flexible packaging, and auto components. The Indian Drug Manufacturers’ Association (IDMA) welcomed the April exemption, with IDMA Executive Director Ashok K. Madan stating it helps the industry manage rising input costs and ensures stability in production, while also benefiting consumers by preventing sharp price increases in essential medicines.

The National President of the Indian Drug Manufacturers Association, Dr. Viranchi Shah, added that waiving import duties on key solvents and chemicals used in API and formulation manufacturing will help curb recent price escalation.

3. New import duties on self-reliant electronics

This is the new directional signal in the panel’s agenda. The government is considering levying fresh duties on select electronic items and parts where domestic manufacturing capacity is established. The rationale: electronics goods imports totalled $116.2 billion in FY26, surpassing gold imports for the first time, and with domestic capacity now available in several sub-segments, import protection becomes the logical next lever.

Sectors Seeking Relief: Who Needs What

Sector	Relief Requested	Key Input at Risk	Why It Matters
Pharmaceuticals	Duty cut on API/drug inputs	Petrochemical intermediates	Input cost surge; drug price pressure on consumers
Steel	Duty cut on raw material inputs	Coking coal, ferroalloys	Global supply tightening post-Iran war
Ceramics	Duty waiver on raw inputs	Mineral intermediates	Energy cost pass-through accelerating
Diamond Polishing	Relief on rough diamond imports	Rough diamonds	Gulf shipping disruption
Polyester Textiles	Duty cut on fibre inputs	PTA, MEG (petrochemical-linked)	Margins under pressure from raw material spike
Specialty Chemicals	Broader exemption coverage	Chemical feedstocks	Strait of Hormuz closure still affecting supply
Flexible Packaging	Extend exemption	Polypropylene, PET	OEM and FMCG packaging cost blowout
Auto Components	Extend exemption	Plastics, rubber, polyurethane	Cascading cost pressure across OEM supply chains

Source: Economic Times, Ministry of Finance inter-ministerial review — June 2026

Industry Voice: What Manufacturers Are Saying

Sudarshan Jain, Secretary-General of the Indian Pharmaceutical Alliance, noted that the crisis has had a deep impact on the supply chain, specifically affecting energy, freight, and delivery timelines.

Namit Joshi, Chairman of Pharmexil, said the exemption offers major relief to the pharmaceutical sector by stabilising prices and benefiting manufacturers, solvent suppliers, and consumers, describing it as a timely and forward-looking step to strengthen supply chains.

From the auto sector, CEO of the Federation of Automobile Dealers Associations, Saharsh Damani, called it a pre-emptive step by the government, noting that since many auto components rely on petrochemical inputs like plastics and polymers, the exemption may reduce disruption risks and contain cost pressures.

Nuclear Power: Retrospective Relief Granted

On June 11, the Finance Ministry issued an order granting retrospective customs duty exemption on all goods imported for nuclear power generation between April 1, 2019, and January 31, 2026, a seven-year lookback that clears outstanding tax liabilities for NPCIL and its equipment suppliers.

The move is expected to reduce project costs for nuclear power developers and equipment suppliers involved in nuclear power generation projects.

The Budget for FY2026-27, presented in February, had already extended fresh nuclear power import exemptions until 2035. The retrospective order fills the gap between those two windows.

Bottom Line

The inter-ministerial panel meeting next week is not a routine review; it is effectively a mid-year trade policy decision point that will set input cost conditions for eight major Indian industries through Q3 FY27.

For equity investors, sectors with the most direct exposure to the outcome are chemicals and petrochemicals (NOCIL, Aarti Industries, SRF); pharma (Sun Pharma, Cipla, Dr Reddy’s for API cost relief); auto components (Motherson, Minda, Sona BLW); and electronics (Dixon Technologies, Kaynes Technology stand to benefit from fresh import duties on competing products).

The nuclear duty waiver is a quiet but meaningful positive for NPCIL project economics and their equipment supplier ecosystem.