India’s Zero-Duty Move on Petrochemicals Timely, But Agrochemical Industry Seeks Clarity and Wider Coverage: ACFI

02 April 2026, New Delhi: The Government of India’s decision to exempt key petrochemical inputs from customs duty till June 30, 2026, is being seen as a timely intervention to stabilize supply chains and support agro-linked industries amid ongoing global uncertainties. The exemption, effective from April 2, covers a wide range of chemical inputs, intermediates and polymers critical to multiple sectors, including agriculture. 

Welcoming the move, Dr. Kalyan Goswami, Director General of the Agro Chem Federation of India (ACFI), said the government’s proactive approach comes at a crucial time when geopolitical tensions are impacting global trade flows and raw material availability.

“We wholeheartedly appreciate the government’s proactive measures and timely interventions to support the nation’s economic and industrial stability and ease of doing business,” he said.

He added that the exemption under G.S.R. 246(E) will play a vital role in ensuring uninterrupted availability of essential agri-inputs for Indian farmers, particularly as the sector prepares for upcoming demand cycles.

Critical Support for Agrochemical Supply Chain

The duty exemption applies to a broad basket of upstream inputs such as anhydrous ammonia, methanol, phenol, acetic acid, monoethylene glycol (MEG), and multiple polymers, which are widely used in the manufacturing of fertilizers, agrochemicals, irrigation systems and packaging materials.

By lowering import costs on these materials, the government aims to ease cost pressures on manufacturers, improve supply continuity and prevent price volatility across the agri-input value chain.

Industry Flags Key Concerns

While appreciating the move, ACFI has also raised several operational concerns that require immediate attention.

Dr. Goswami highlighted the need for clarity on whether consignments currently held in bonded warehouses in India will be eligible for the reduced duty rates, a factor that could significantly impact importers and inventory planning.

The industry body has further recommended the inclusion of additional critical chemicals such as acetone, acetonitrile, xylene, ETFA and heptane in the exemption list to ensure smoother operations and avoid disruptions.

Supply Chain Pressures Persist

Despite the duty relief, the agrochemical industry continues to face significant supply chain challenges. According to ACFI, companies are increasingly relying on forward contracts to secure raw materials, leading to aggressive and rapid inventory build-up, which in turn is putting pressure on global supply chains.

Current inventory levels across the industry are expected to last only until August–September 2026, after which fresh procurement will become critical.

Adding to the concern, delays in vessel arrivals are further tightening material availability timelines. In this context, ACFI has suggested that the government consider extending the duty exemption into the second quarter (Q2) to mitigate the impact of logistical disruptions.

Balancing Relief with Long-Term Stability

Industry experts note that while the government’s decision provides immediate relief, the evolving global situation necessitates continued policy support and flexibility. Ensuring timely availability of raw materials will be key to maintaining production levels of fertilizers and crop protection products, which directly impact agricultural productivity.

Also Read: How is India Protecting Farmers from Climate Change at Scale?

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