India eases export obligation mandate for import of chemicals under BIS

India's Directorate General of Foreign Trade under the Ministry of Commerce and Industry has extended the export obligation period for the import of products that are subject to Quality Controls Orders by the Department of Chemicals and Petrochemicals, it notified on Sept. 1 via an amendment to the Foreign Trade Policy, 2023.

"The Export Obligation Period against the import of the products that are subjected to mandatory QCOs by the Department of Chemicals & Petrochemicals (DCPC), under Advance Authorisation has been extended from existing 6 months to 18 months," the notification read.

The amendment will allow end-users an extended period of 18 months, as against the earlier six-month period, to export value-added downstream products of corresponding volume from the date of import of upstream chemicals that do not have certification from the Bureau of Indian Standards.

According to the earlier notification in this regard, only BIS-certified chemicals and petrochemicals could be imported into India for the production of respective downstream products to be sold domestically, while the non-BIS imports had to be converted into downstream products and exported within six months from the date of import.

While this amendment is likely to support India-based buyers of input petrochemicals such as purified terephthalic acid, it could weigh on the margins of domestic producers of various petrochemicals that are subject to BIS norms.

"This would increase the supply of the chemical in the country, as we can now import non-BIS material and have a longer timeframe to process and export the finished goods," a buy-side source said.

"Amid capacity additions in the country toward the self-reliance push by the government, this amendment could open gates to more imports, which would dampen prices," a producer source said, adding that they would prefer to study the amendment more closely, and it would be too early to make any substantial comments.