Agro-chemical sector sees input costs falling 8-9% after customs duty cut

The almost Rs 70,000 crore Indian agro-chemical sector expects an 8–9 per cent drop in its input costs due to the latest government decision to lower customs duty on major chemicals and petro-chemicals for three months in the wake of the West Asia crisis, but it might not have any impact on kharif pricing as inventories have already been built up, experts said. 

The duty exemption will start from April 2 and continue till June 30, 2026, an official order said. 

“The actual impact of this reduction in customs duty would be felt in the second half of this fiscal (FY27) when new products will be produced, because for now most companies have already produced their plant protection chemicals and even 40–50 per cent of them have been despatched to dealers,” a senior industry official remarked.

   

The Centre earlier in the day lowered the customs duty on a host of chemicals and petrochemical items such as isopropyl alcohol, PVC, polypropylene, polystyrene, MEG, and also formaldehyde (a good stabiliser) that are used extensively in the manufacturing of pesticides, herbicides, and fungicides.

 

A few days back, Ankur Aggarwal, chairman of CropLife India and executive chairman and managing director of Crystal Crop Protection, in a statement had said that the disruption in supply chains and key shipping routes due to the West Asia conflict is likely to impact input costs by 20–25 per cent for the crop protection industry, leading to a rise in costs for farmers accordingly.

 

“The disruptions may lead to a shortage of certain crop protection products during a critical agriculture season, impacting yield and quality of produce,” Aggarwal had said.

 

Dr Kalyan Goswami, director general of Agro Chem Federation of India (ACFI), while welcoming today’s government decision, said that it will ensure that Indian farmers have an uninterrupted supply of vital agri inputs.

 

"ACFI would also strongly recommend the immediate inclusion of several essential chemicals, specifically acetone, acetonitrile, xylene, ETFA, and heptane, in the relevant statutory list to ensure continued operational stability across the sector," Goswami said.

 

He said the current industry inventory levels are projected to be exhausted by August–September 2026 and new inventory will be required soon after.

 

“The situation is worsening as vessels are experiencing delays against their scheduled arrival in India. This necessitates extending the order to the second quarter (Q2) to mitigate the impact of these delays on material availability,” Goswami said.