India's Targeted Measures to Mitigate Impact of Iran War on Businesses

Original: A shield for India Inc: How govt is blunting the Iran war shock

The Economic Times•Apr 2, 20265 min

In a Nutshell

In response to the ongoing Iran war, the Indian government has implemented a series of targeted measures to support exporters and manufacturers facing increased costs and supply chain disruptions. Key actions include a relief package for exporters, extended credit timelines, duty exemptions on petrochemical inputs, and reduced fuel taxes to stabilize the economy.

Key Points

01The government has introduced a multi-part relief package for exporters, allowing Special Economic Zone units to sell a portion of their output domestically.
02The Reserve Bank of India has extended export credit periods and relaxed deadlines for export proceeds to alleviate cash flow issues.
03Customs duties on select petrochemical feedstocks have been removed to support manufacturing sectors.
04Excise duties on transport fuels have been significantly reduced to lower logistics costs and combat inflation.
05An active monitoring system for critical goods has been established to ensure supply chain stability.

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Full Summary

The ongoing Iran war has led to increased volatility in global oil prices and trade flows, prompting the Indian government to implement a series of targeted measures to support businesses. The government has introduced a comprehensive relief package for exporters, allowing Special Economic Zone (SEZ) units to sell up to 30% of their output domestically for one year, from April 2026 to March 2027, with reduced customs duties ranging from 5% to 15%. Additionally, the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme has been extended until September 2026. The Reserve Bank of India has also eased financial conditions by extending export credit periods from 270 days to 450 days and allowing up to 15 months for the realization of export proceeds. To protect manufacturing, customs duties on select petrochemical inputs have been eliminated until June 2026. Furthermore, the government has reduced excise duties on petrol and diesel, with petrol now taxed at around ₹3 per liter and diesel effectively at zero, helping to lower logistics costs across various sectors. These measures aim to cushion the impact of external disruptions and ensure that India's industrial and trade sectors maintain resilience.

Key Figures

₹497 crore

Dedicated support package for offsetting increased freight charges and war-risk insurance premiums

₹1,800 crore

Estimated total support measures rolled out by the government

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Why It Matters

These measures are designed to stabilize businesses facing increased costs and supply chain disruptions, helping to maintain production levels and prevent layoffs.

Who is affected

exporters, manufacturers, and consumers across various sectors

What to know

Businesses should stay informed about the new regulations and take advantage of the extended credit and duty exemptions.

FAQ

The government has introduced a relief package allowing SEZ units to sell a portion of their output domestically, extended the RoDTEP scheme, and provided financial support to offset increased freight charges.

The RBI has extended the maximum period for export credit and relaxed the deadline for realizing export proceeds to provide greater financial flexibility.

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