Govt studying impact of US tariffs on chemicals, petrochemicals sector

The government is still assessing the impact of US tariffs on the country's chemicals and petrochemicals industry, a senior official said on Thursday.

"We are still studying. We are in touch with the industry and trying to assess how it will impact our industry," Chemicals and Petrochemicals Secretary Nivedita Shukla Verma told PTI on the sidelines of a brainstorming session here.

US President Donald Trump on April 9 reduced a planned 26 per cent reciprocal tariff to 10 per cent, just one week after announcing the higher rate on April 2.

The government will determine measures after discussions with industry players, Verma added.

According to industry data, chemicals constitute about 18 per cent of India's total exports to the US, with FY24 exports valued at around $5.7 billion.

India Ratings and Research estimates the tariff hike could reduce chemical exports by USD 2-7 billion in FY26.

Industry experts said the tariff increase substantially raises costs for Indian chemical exports to the US, likely reducing demand for speciality chemicals and intermediates.

Indian petrochemical exports to the US, valued at approximately $4 billion in 2024, may see reduced demand, though some petroleum oil sub-segments might be exempt, softening the impact.

The US tariffs on Chinese chemicals have also triggered concerns about dumping, as Chinese firms facing economic slowdown and surplus capacity may flood India and other global markets with cheaper products, potentially depressing global chemical prices, they added.

Earlier, at a brainstorming session, Verma emphasised fostering long-term development of the Indian chemical and petrochemical sector, including discussions on infrastructure development specifically tailored for the chemical industry.