India Budget: Customs overhaul to cut costs, boost manufacturing

New Delhi: India is rolling out a comprehensive overhaul of its customs regime in the Union Budget 2026-27, with targeted duty relief to lower input costs for key manufacturing and exports sector, faster customs clearance with a single digital window for all approvals, and deep digitisation to make the country a more predictable and investor-friendly manufacturing hub.

To counter higher US tariffs on Indian exports, the budget extends and liberalises duty-free import schemes for inputs in export-oriented sectors such as textiles, leather, synthetic footwear-including shoe uppers-and marine and seafood processing. The move is expected to lower input costs and enhance competitiveness in these key segments.

The budet also rationalised basic customs duty in strategic sectors, including lithium-ion battery cells, solar glass, and critical mineral processing equipment, while extending duty exemptions for nuclear power project imports till 2035.

This, apart from helping strategic sectors, will also allow greater market access to the US, especially in civil and defence aviation and clean energy sector. It will benefit American aerospace firms and engine and maintenance suppliers, and nuclear equipment makers. It will also give tax certainty and reduce other duty barriers in clean energy, critical minerals, electronics, and healthcare, with an eye on concluding trade negotiations with the US.

The budget also gave clarity on customs classifications through the creation of 12 new tariff items.

These targeted measures aim to ease input costs for energy-intensive and high-tech manufacturing while reducing import dependence. The government also proposed to strengthen trade facilitation through trusted trader programs.