Petchem tariffs in focus as India-US trade talks warm up

US asks for tariff concessions on petrochemical exports, India pushes for more value addition

- Dhirendra Kumar & Utpal Bhaskar

As Indian and US negotiators huddle in Washington to iron out issues in a potential trade deal, one of the key areas that has emerged is petrochemical trade, three people aware of the matter said on the condition of anonymity.

The American side has asked for tariff concessions on petrochemical exports to India, even as their Indian counterparts are pushing more value addition to be done in India—less imports from the US of finished goods and more of raw materials to be processed in India.

Currently, India imports both raw materials—mostly crude oil—and finished goods of the petrochemical value chain from the US, including polypropylene (PP), low-density polyethylene (LDPE), styrene-butadiene rubber (SBR), among others. These products in turn become raw materials for Indian industries such as packaging, automotive, construction, and textiles.

In return, India supplies refined and processed petrochemical products to the US such as diesel, aviation turbine fuel, aromatic compounds such as benzene and paraxylene, which are used in plastics and synthetic fibres.

If India can get more raw materials instead of finished goods from the US, it would enhance the country's domestic manufacturing capabilities, generate employment, and boost exports of higher-value petrochemical products, the people cited above said.