Centre’s duty cut cushions Gujarat’s chemical, textile sectors

Ahmedabad: In a timely intervention for one of India's most chemical-intensive industrial states, the Centre's decision to waive customs duty on a wide basket of chemicals and petrochemicals from April 2 to June 30 is expected to bring short-term relief to Gujarat's manufacturing ecosystem, which has been grappling with elevated input costs amid global energy volatility.The exemption, removing an effective 8.25% import duty, covers critical feedstocks such as methanol, acetic acid, vinyl chloride monomer (VCM), purified terephthalic acid (PTA), monoethylene glycol (MEG), phenol, styrene, and a range of polymers including polyethylene, polypropylene, PVC, and ABS. These are core inputs for Gujarat's chemical, plastics, and textile value chains, all of which have seen margin pressures in recent months."A duty reduction will certainly help manufacturers reduce their input costs. However, more than costs, the current concern is availability. The closure of the Strait of Hormuz has led to a marked shortage of chemicals. We expect the war-related uncertainty to ease so that more vessels can reach Indian ports," said Bhupendra Patel, chairman, Chemexcil Gujarat.Industry players say the duty waiver will lower landed costs of imported intermediates, particularly for companies dependent on global supply chains for solvents and bulk chemicals.Ankit Patel, vice chairman of Chemexcil, said, "Almost all basic chemicals will see a 10% drop in prices, which will lower production costs. The decision is aimed at protecting Indian industry from sudden price spikes triggered by the West Asia conflict."However, the sector continues to struggle with limited PNG supply, which is impacting production.Nilesh Damani, former vice president of the Gujarat Dyestuffs Manufacturers' Association, said, "The duty exemption on essential feedstocks such as methanol, toluene, and styrene will immediately reduce procurement costs. These chemicals are widely used as core raw materials in pharmaceuticals, plastics, polymers, and textiles, all of which have a strong manufacturing base in Gujarat.""Lower import costs will help ease margin pressure, support production planning, and offer some stability after months of steep increases in raw material prices," Damani added.The move is also significant for Gujarat's dominant polyester and man-made fibre (MMF) segment, which relies heavily on PTA and MEG.Rahul Shah, co-chair of the GCCI textile committee, said, "Raw material prices of dyes and chemicals have increased by 70–80%. The duty cut on input chemicals and polymers will have little impact on the total production cost — and that too only if traders pass on the benefit. The real challenge for industries currently is to keep production going, irrespective of costs."The inclusion of key polymers such as PE, PP, PVC, and polystyrene will also help soften raw material costs for the plastics and packaging industry.