As of June 30, 2026 (Beijing Time), India's full temporary import duty exemption on 40 key petrochemical products has officially expired. The three-month duty-free window that took effect on April 2 this year is about to close, and as of now, India has not released an official notice for an extension.

If tariffs are restored to the standard 7.5% starting July 1, the price advantage of China's major petrochemical exports to India—such as isopropanol, styrene, PTA, PVC, ethylene glycol, ABS, and PC—will rapidly dissipate, ushering in a new round of adjustments in the regional petrochemical trade landscape.

I. Policy Origin: April 2026, Emergency Interim Zero Tariff Introduced

Key Time Node 1: April 1, 2026

The Indian Ministry of Finance issued Customs Notification No. 12/2026 (G.S.R.246 [E]) in the Official Gazette, formally announcing the temporary tariff exemption scheme. This measure aims to address the disruption in global crude oil and petrochemical supply chains caused by geopolitical conflicts in West Asia, utilizing tax regulation to stabilize the supply of industrial raw materials domestically.

Key Time Node 2: April 2, 2026

The zero import tariff policy for these 40 petrochemical products officially took effect, with a validity period explicitly set from April 2, 2026, to June 30, 2026.

The duty-free list covers core chemical products across the entire industry chain: basic chemical raw materials including isopropanol, styrene, phenol, ethylene glycol, and PTA; general plastic materials such as PVC and polyurethane; and engineering materials encompassing epoxy resins, ABS, and PC. These products serve downstream pillar manufacturing industries in India, including textiles, packaging, automotive, electronics, construction materials, and coatings.

The policy was primarily introduced for two reasons:

1. To hedge against risks of shipping blockades in the Middle East and rising international petrochemical raw material prices, by expanding imports of overseas sources through zero tariffs to ensure a stable supply of raw materials for domestic factories;

2. To lower production costs for downstream manufacturing, alleviate inflationary pressure on domestic industrial goods, and support the development of local small and medium-sized manufacturing enterprises. Estimates suggest this temporary policy will cost the Indian treasury approximately 18 billion rupees in phased tariff revenue losses, representing a typical emergency short-term regulatory measure. The Indian government made it clear at the outset that upon expiration, the policy's direction would be reassessed based on global supply and demand trends.

Benefiting from the zero-tariff dividend, China, as a core source of India's petrochemical imports, saw a significant reduction in export costs for relevant products. Export orders for categories such as PVC, ethylene glycol, and PTA were concentratedly released, phased out domestic chemical production capacity, and export volumes showed a noticeable rebound.

II. Eve of Policy Expiration: Repeated Extension Expectations, Yet No Official Implementation Document

Key Time Node 3: Mid-to-Late June 2026

Less than a month away from the duty-free deadline, relevant officials from India's Ministry of Commerce and Industry signaled that the government was assessing whether to extend the zero-tariff policy for the 40 petrochemical products. The market immediately formed expectations of policy continuity, with many foreign trade enterprises choosing to schedule production in advance and lock in orders for India to avoid cost impacts from rising tariffs.

However, as of June 30, the day the policy expired, neither the Ministry of Finance nor the Ministry of Commerce and Industry issued any formal announcement regarding the extension of the tariff exemption. Verbal statements did not translate into legally effective customs notifications, market expectations for an extension fell through, and the policy's trajectory fell into uncertainty.

Industry analysis indicates that India's delay in officially announcing an extension stems, on one hand, from the recent decline in international petrochemical raw material prices and the alleviation of supply chain tensions, reducing the pressure to secure local raw material supplies. On the other hand, the demands of India's domestic petrochemical industry have become prominent, with local producers hoping to restore standard tariffs to weaken the competitive advantage of low-priced overseas products and protect the development space of domestic petrochemical capacity.

III. Critical Window on July 1: If Tariffs Are Restored, China's Petrochemical Export Dividend Ends

Key Time Node 4: July 1, 2026 (Pending Policy Effective Date)

If India ultimately does not issue an extension document, starting July 1, these 40 categories of petrochemical products will uniformly revert to the basic 7.5% import tariff. The export price advantage of the previous three months will officially come to an end, impacting China's petrochemical foreign trade market in three ways:

1. Significantly Weakened Price Competitiveness: Under equivalent quotations, Chinese export enterprises will need to bear an additional 7.5% tariff cost. In the Indian market, they will face fierce competition from sources in Japan, South Korea, and Southeast Asia. Products highly dependent on the Indian market, such as PVC, PTA, and ethylene glycol, may experience a phased decline in export volumes to India;

2. Pressure on Domestic Chemical Supply and Demand: The excess capacity previously absorbed by exports to India will flow back into the domestic market, and some categories may face pressure from rising inventories and weakening prices;

3. Realignment of Trade Flows: Domestic petrochemical foreign trade enterprises will accelerate the exploration of emerging markets such as Southeast Asia, the Middle East, and Latin America to disperse risks associated with reliance on a single market, ushering in a reshaping of the global petrochemical trade landscape.

IV. Market Outlook

Currently, the market envisions two policy scenarios:

Scenario 1: The short-term policy expires directly, and the standard 7.5% tariff is implemented as scheduled starting July 1. India supports the expansion of domestic petrochemical capacity through tariff barriers, and Chinese enterprises are forced to compress their export share to India;

Scenario 2: India subsequently issues a supplementary temporary extension notice, briefly continuing the zero-tariff window to buffer cost pressures for downstream manufacturing. However, given the emergency nature of the policy, it is unlikely to be extended indefinitely in the long term.

Multiple chemical foreign trade practitioners caution that at this stage, enterprises need to closely track official Indian customs announcements. On one hand, they should adjust quotations for India in a timely manner and recalculate order profits; on the other hand, they should accelerate the layout of diversified overseas markets, relying on product differentiation advantages to hedge against foreign trade risks arising from tariff policy fluctuations in a single country.