Nil customs duty on chemicals


Executive Summary: A Strategic Move by the Ministry of Finance

In a significant policy intervention aimed at stabilizing domestic chemical prices, the Ministry of Finance (Department of Revenue) issued Notification No. 12/2026-Customs on April 1, 2026. The notification became effective from April 2, 2026, and will remain in force until June 30, 2026.

The notification reduces the Basic Customs Duty (BCD) to zero on over 40 critical chemical intermediates and raw materials. This decision directly responds to the ongoing supply chain disruption caused by the Middle East conflict and the recent shutdown of Deepak Phenolics' Dahej plant.

Why Did the Government Issue This Notification?

According to an S&P Global Chemical News report dated April 2, 2026, Deepak Phenolics was forced to shut its 330,000 metric tonnes per year phenol and 220,000 metric tonnes per year acetone plant in Dahej, Gujarat. The shutdown began on April 3, 2026, due to a raw material shortage.

The company's propylene suppliers declared force majeure, citing disruptions in the Strait of Hormuz caused by the ongoing situation in the Middle East. As a result, domestic prices increased sharply.

S&P Global assessed the following price increases:

  • CFR India phenol jumped by 210 US dollars per metric tonne to 1,410 US dollars per metric tonne.
  • CFR India acetone jumped by 230 US dollars per metric tonne to 1,480 US dollars per metric tonne.

To prevent downstream industries such as pharmaceuticals, paints, laminates, and plastics from facing severe disruption, the Indian government waived customs duty to encourage imports.

Full List of Chemicals Now Under Zero Customs Duty

Here are the key chemicals now eligible for zero Basic Customs Duty under Notification 12/2026:

Phenol – HS Code 2907 11 10

Acetone – Covered under related phenol tariff items

Isopropyl Alcohol (IPA) – HS Code 2905 12 20

Styrene – HS Code 2902 50 00

Toluene – HS Code 2902 30 00

Methanol (Methyl Alcohol) – HS Code 2905 11 00

Monoethylene Glycol (MEG) – HS Code 2905 31 00

Acetic Acid – HS Code 2915 21 00

Vinyl Acetate Monomer – HS Code 2915 32 00

Vinyl Chloride Monomer – HS Code 2903 21 00

Dichloromethane (Methylene Chloride) – HS Code 2903 12 00

Purified Terephthalic Acid (PTA) – HS Code 2917 36 00

Ethylenediamine – HS Code 2921 21 00

Di Ethanolamine and Mono Ethanolamine – HS Codes 2922 11 10, 2922 11 90, 2922 12 00

Toluene Di-Isocyanate (TDI) – HS Code 2929 10 20

Linear Alkylbenzenes (LAB) – HS Code 3817 00 11

Polymers of Ethylene (including Ethylene-Vinyl Acetate) – HS Code 3901

Polypropylene (PP) – HS Codes 3902 10 00, 3902 30 00, 3902 90 00

Polystyrene – HS Codes 3903 11 00, 3903 19 10, 3903 19 90

Styrene-Acrylonitrile (SAN) – HS Code 3903 20 00

Acrylonitrile-Butadiene-Styrene (ABS) – HS Code 3903 30 00

Polyvinyl Chloride (PVC) – HS Codes 3904 10 10, 3904 10 20, 3904 10 90

Polytetrafluoroethylene (PTFE) – HS Code 3904 61 00

Poly (Vinyl Acetate) – HS Codes 3905 12, 3905 19

Poly (Vinyl Alcohol) – HS Code 3905 30 00

Poly (Methyl Methacrylate) – Acrylic – HS Codes 3906 10 10, 3906 10 90

Polyoxymethylene (POM – Acetal) – HS Code 3907 10 00

Polyols – HS Code 3907 29

Polyether Ether Ketone (PEEK) – HS Code 3907 29 90

Epoxy Resins – HS Code 3907 30 10

Polycarbonates – HS Code 3907 40 00

Alkyd Resins – HS Code 3907 50 00

PET Chips – HS Codes 3907 61, 3907 69

Unsaturated Polyester Resins – HS Code 3907 91 20

Polybutylene Terephthalate (PBT) – HS Code 3907 91 50

Formaldehyde, Urea Formaldehyde, Melamine Formaldehyde, Phenol Formaldehyde – HS Codes 2912 11 00, 3909 10 10, 3909 20 10, 3909 40 20

Polyurethanes – HS Code 3909 50 00

Polyphenylene Sulfide (PPS) – HS Code 3911 90 90

Polybutadiene and Styrene Butadiene – HS Code 4002 series

Additionally, a separate notification (No. 13/2026-Customs) exempts Ammonium Nitrate (HS Code 3102 30 00) from the Agriculture Infrastructure and Development Cess (AIDC), bringing its total tax incidence to zero.

Immediate Impact on the Indian Chemical Market

Relief for Downstream Industries

Manufacturers of epoxy paints, polycarbonate sheets, medical-grade IPA, and ABS plastics can now import raw materials without the previous duty burden, which ranged from 2.5 percent to 7.5 percent.

Price Correction Expected

With the Deepak Phenolics plant closed until at least April 15, 2026, domestic supply remains tight. However, the zero-duty window from April 2 to June 30, 2026, allows traders to ship competitively priced material from Asia, Europe, or the United States without tariff friction.

Strategic Stockpiling Opportunity

Logistics managers should note the sunset clause of June 30, 2026. Import orders must be shipped and cleared before July 1, 2026, to claim the benefit.

Official Notification Details

Issuing Authority: Ministry of Finance, Department of Revenue

Signed By: Dheeraj Sharma, Under Secretary

Notification Number: 12/2026-Customs (G.S.R. 246(E))

Secondary Notification: 13/2026-Customs (G.S.R. 247(E)) for AIDC exemption on Ammonium Nitrate

Gazette Reference: CG-DL-E-02042026-271497

Date of Issue: April 1, 2026

Effective Date: April 2, 2026

Validity Period: Up to and inclusive of June 30, 2026

Disclaimer

Disclaimer: This information is for general informational purposes only and does not constitute legal or tax advice. While Greencrossindia.com strives for accuracy, customs duty exemptions are subject to change based on government notifications. Importers must verify the applicability of Notification No. 12/2026-Customs and 13/2026-Customs with their licensed customs broker and refer to the official Gazette of India before making any financial or shipping decisions.

Conclusion

The Government of India has acted swiftly to counter the supply shock caused by the Deepak Phenolics shutdown and the Strait of Hormuz disruptions. By eliminating customs duty on phenol, acetone, IPA, and over 40 derivative chemicals, authorities aim to curb inflation in the plastic and chemical sectors.

For buyers of phenol, acetone, IPA, styrene, PVC, and related chemicals, the next 90 days represent a strategic window for cost-effective imports.

Sources Cited:

S&P Global Chemical News

The Gazette of India, Extraordinary, April 1, 2026


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