The Indian government is planning a major overhaul of its customs duty regime, which could include lowering tariffs on a large number of goods in the FY27 Budget. The focus is expected to be on reducing duties for raw materials and intermediate goods to encourage local value addition in manufacturing. This “autonomous initiative” aims to lower trade barriers despite global tariff pressures and ongoing Free Trade Agreement (FTA) negotiations.
India’s customs policy is currently at an “inflection point,” balancing protectionist measures for agriculture with the need to integrate into global value chains. While duties on essentials like fruits and vegetables remain high (up to 100-120%) to protect rural livelihoods, the government is looking to cut rates for inputs in sectors like automobiles and semiconductors. This strategy is designed to promote domestic manufacturing while lowering overall import bills.
A proposed integration of different customs platforms into one unified system is seen as the next major reform. This one unified system is expected to smooth data submission, reduce “dwell time” for cargo, and align with global trade facilitation agreements. The government appears willing to forego some customs revenue in exchange for significantly increased market access in major global economies through well-negotiated FTAs.