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Mumbai: India’s chemical sector has received a significant policy reprieve with the extension of the export obligation period under the Advance Authorisation scheme from 6 months to 18 months for products covered by Quality Control Orders (QCOs). The change, formalised through Notification No. 28 dated May 28, 2025, by the Directorate General of Foreign Trade (DGFT), follows recommendations from the Department of Chemicals and Petrochemicals (DCPC) and mirrors similar adjustments made for other sectors such as textiles.

The timing of this decision is notable. In the financial year 2024–25, chemical exports reached $46.4 billion, accounting for 10.6% of India’s total export value. The sector’s scale and complexity make it particularly sensitive to regulatory timelines and input cost fluctuations. By extending the export obligation period, the government has effectively reduced pressure on exporters to meet tight deadlines, allowing greater flexibility in procurement, production and shipment planning.

Under the Advance Authorisation scheme, importers are permitted to bring in duty-free raw materials for export production. While these inputs are exempt from QCO compliance, the finished products must adhere to the relevant standards. The extended timeline provides exporters with a wider operational window to meet these requirements without compromising on quality or delivery commitments.

Industry stakeholders have welcomed the move as a practical step that aligns regulatory compliance with commercial realities. The chemical sector, which includes a broad array of petrochemicals, industrial chemicals and specialty compounds, often faces logistical and supply chain challenges that are exacerbated by short export obligation periods. The new 18-month window is expected to ease working capital constraints and reduce the risk of penalties or lapses due to unforeseen delays.

This policy shift also has implications for India’s positioning in global markets. With more time to fulfil export obligations, companies may be better equipped to compete on quality and reliability – factors that are increasingly critical in international trade. While the government has framed the extension as part of its broader strategy to support the chemicals and petrochemicals industry, the measure stands out for its immediate operational impact rather than aspirational rhetoric.

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