The Union Budget 2026-27 introduces wide-ranging Customs and Central Excise reforms aimed at simplifying tariff structures, boosting domestic manufacturing, enhancing export competitiveness and improving ease of living. Key measures include duty exemptions for energy, aviation and healthcare sectors, faster customs clearance through digitisation, SEZ relief, and incentives for exporters, small businesses and honest taxpayers.
The Finance Minister stated that the proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty.
Rationalisation of Custom Duties
In Marine, Leather, and Textile products, the limit for duty-free imports of specified inputs used for processing seafood products for export, is to be increased from the current 1 per cent to 3 per cent of the FOB value. The duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear will be allowed.
In Energy sector, the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries will be extended and the basic customs duty on import of sodium antimonate for use in manufacture of solar glass will be exempted.
The Finance Minister added that the existing basic customs duty exemption on imports of goods required for Nuclear Power Projects will be extended till the year 2035 and the basic customs duty on specified parts used in the manufacture of microwave ovens will be exempted.
The basic customs duty to the import of capital goods required for processing of critical minerals will be exempted and the entire value of biogas while calculating the Central Excise duty payable on biogas blended CNG will be excluded.
In the Civil and Defence Aviation sector, the basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts will be exempted and the basic custom duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector will be exempted.
Further, a special one-time measure, to facilitate sales by eligible manufacturing units in Special Economic Zone to the Domestic Tariff Area (DTA) at concessional rates of duty is proposed.
To enhance the Ease of Living, the Finance Minister stated that the tariff rate on all dutiable goods imported for personal use will be reduced from 20 per cent to 10 per cent. The basic customs duty on 17 drugs or medicines will be exempted. 7 more rare diseases will be added for the purposes of exempting import duties on personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP) used in their treatment.
Custom Processes
The Custom processes to have minimal intervention for smoother and faster movement of goods. Further, Duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, is to be enhanced from 15 days to 30 days. Same is extended to the eligible manufacturer-importers. The Validity period of advance ruling, binding on Customs, is proposed to be extended from the present 3 years to 5 years. The government agencies will be encouraged to leverage AEO accreditation for preferential treatment in clearing their cargo.
The Budget also proposes that the Customs warehousing framework is to be transformed into a warehouse operator-centric system with self-declarations, electronic tracking and risk-based audit.
Ease of Doing Business
Multiple initiatives have been taken in the Ease of Doing Business sector. For instance, Cargo clearance approvals from various Government agencies to be seamlessly processed through a single and interconnected digital window by the end of the financial year. For goods not having any compliance requirement, clearance is to be done by Customs immediately after online registration is completed by the importer. The Customs Integrated System (CIS) is to be rolled out in 2 years as a single, integrated and scalable platform for all the customs processes. Also, the Utilization of non-intrusive scanning with advanced imaging and AI technology for risk assessment is to be expanded in a phased manner with the objective to scan every container across all the major ports.
The Union Budget 2026-27 makes the Fish catch by an Indian fishing vessel in Exclusive Economic Zone (EEZ) or on the High Seas free of duty. Landing of such fish on foreign port will be treated as export of goods. The budget also proposes complete removal of the current value cap of ₹10 lakh per consignment on courier exports-supports aspirations of India’s small businesses, artisans and start-ups to access global markets through e-commerce
The Provisions governing baggage clearance are also to be revised during international travel. Revised rules to enhance duty-free allowances in line with the present day travel realities. Further, Honest taxpayers, willing to settle disputes will be able close cases by paying an additional amount in lieu of penalty.
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