As West Asia conflict drives costs higher, Centre cuts duties on key petrochemical inputs

The Centre has moved to shield India’s healthcare manufacturing ecosystem from escalating global disruptions, announcing a temporary full customs duty exemption on key petrochemical inputs till June 30, 2026, as tensions in West Asia begin to affect supply chains and input costs.

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The decision, notified on April 2, comes amid rising concerns over energy availability, elevated freight costs, and delays in the movement of raw materials critical to pharmaceuticals and medical devices. The government said the measure is aimed at ensuring the continued availability of key inputs, reducing input cost pressures on downstream industries, and safeguarding supply stability.

The exemption spans a wide range of petrochemical feedstocks and intermediates, including polymers such as polypropylene, polycarbonate, and PVC, which are widely used in the production of medical consumables, drug delivery systems, packaging, and other healthcare products.

For medical device manufacturers, who rely heavily on these materials, the move offers immediate support at a time when input costs have risen sharply.

“Raw materials such as polypropylene, ABS, polycarbonate, and PVC resin form the backbone of medical consumables manufacturing, and their exemption provides much-needed relief to domestic manufacturers, especially MSMEs,” said Himanshu Baid, Managing Director, Poly Medicure Ltd.

The relief follows a period of sharp cost escalation triggered by disruptions around the Strait of Hormuz, a critical trade route for energy and petrochemical supplies. Industry estimates indicate that prices of key plastic inputs used in medical devices have risen significantly, alongside higher packaging, logistics, and energy costs.

A recent representation by the Association of Indian Medical Device Industry (AiMeD) to the government highlighted a nearly 50% rise in prices of critical plastics, along with higher packaging, logistics, and energy costs, underscoring the strain on manufacturers.

Despite these pressures, there are no immediate shortages of medical supplies. However, manufacturers have reported longer lead times, elevated freight charges, and growing pressure to revise product prices by 10–20% if disruptions persist.

Pharmaceutical companies have flagged similar concerns around supply continuity and logistics.

“The ongoing West Asia conflict is having an impact on energy supplies, freight costs, and the timely movement of products,” said Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance. “In this difficult situation, we appreciate the Government of India’s proactive efforts to mitigate potential supply-related disruptions,” he added.

Jain noted that the setting up of empowered committees and continuous coordination across ministries would help manage emerging risks. He also welcomed the restoration of RoDTEP rates, saying such measures would support exports and ease input cost pressures.

“Our primary focus remains on ensuring the uninterrupted supply of medicines, which is critical to public health and health security,” he said.

The government’s intervention is expected to stabilise input availability and ease cost pressures across downstream sectors, including pharmaceuticals and healthcare, while also helping contain inflationary pressures for consumers.

However, industry bodies have indicated that further support may be required if disruptions continue. The Association of Indian Medical Device Industry (AiMeD) has reiterated its request for temporary GST relief on key input materials and faster refunds to ease working capital constraints arising from the inverted duty structure.

“Reducing GST on inputs would provide cumulative support and improve the competitiveness of India’s medical devices sector globally,” said Rajiv Nath, Forum Coordinator, AiMeD.

The developments come at a time when India’s healthcare manufacturing sector is expanding capacity under government-backed initiatives such as production-linked incentive schemes, even as it remains dependent on imported petrochemical intermediates.

For now, the duty waiver provides a cushion against external shocks. But with geopolitical tensions continuing to affect global trade flows, the industry said, it remains watchful of further cost pressures and logistical bottlenecks in the months ahead.