India reduces import taxes on petrochemicals in order to support local industry

India has abolished import taxes on petrochemicals that are used to make plastics, pharmaceuticals and other goods. This is after the government invoked emergency powers and diverted local chemicals for the production of cooking gases due to the shortages caused by war in Iran.

According to a statement released by the government on Thursday, the import tax exemption for 40 products will be valid until June 30.

Manish Sejwal is a senior vice president on the oil trading team of Rystad Energy.

India is a net exporter of these petrochemical products, though it produces them at home using feedstocks like liquefied petrol gas, naphtha and ethane.

After the U.S. and Israeli strikes on Iran, India ordered that companies divert locally produced petrochemicals to make LPG. This gas is mainly used as cooking gas.

India is the No. 2 LPG importer in the world, meeting?about 60% of its needs with?overseas purchases. India is the world's No.

This shift has put pressure on petrochemical companies, who are struggling with tighter supply, higher prices, and higher premiums.

Plastics and packaging producers in Asia are already experiencing a surge in premiums, which is affecting the output of petrochemical factories.

(source: Reuters)