Budget 2026-27: Customs and Excise Reforms to Simplify Tariffs and Boost Domestic Manufacturing

Last updated: 01 February 2026

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The Union Budget 2026-27 introduces significant reforms to the Customs and Central Excise system, aiming to simplify tariff structures and bolster domestic manufacturing. Key proposals include removing exemptions on certain imported items manufactured in India, incorporating effective duty rates directly into the tariff schedule, and extending duty-free import allowances for specific export-oriented inputs, such as those for seafood and footwear. The budget also focuses on promoting energy transition and security through exemptions for lithium-ion cell manufacturing, solar glass production, and nuclear power projects, alongside supporting the aircraft and consumer electronics sectors. Additionally, measures are in place to facilitate sales from Special Economic Zones to the Domestic Tariff Area.

The Budget proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty, said Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman while presenting the Union Budget 2026-27, in Parliament today. Taking forward the weeding out of long continuing customs duty exemptions, the Budget proposes to remove certain exemptions on items which are being manufactured in

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FAQ :

The reforms aim to simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct duty inversions.

It proposes removing customs duty exemptions on items already manufactured in India or with negligible imports, and exempts basic customs duty on capital goods for processing critical minerals.

The limit for duty-free imports of specified inputs for seafood exports will increase, and duty-free imports will be allowed for shoe uppers. The export time period for leather and textile products is also extended.

Yes, the Budget extends duty exemptions for manufacturing lithium-ion cells for batteries and battery energy storage systems, exempts duty on sodium antimonate for solar glass, and extends exemptions for nuclear power projects.

Eligible manufacturing units in SEZs will be facilitated to sell to the Domestic Tariff Area (DTA) at concessional duty rates as a one-time measure, limited to a prescribed proportion of their exports.

The Budget proposes to exclude the entire value of biogas when calculating the Central Excise duty payable on biogas blended CNG.

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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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