Finance Minister Nirmala Sitharaman unveiled a series of customs duty reductions in sectors like marine products, textiles, leather, defense, and aviation to stimulate manufacturing and enhance exports in the Union Budget 2026-27 presented in the Lok Sabha on Sunday.
To support marine product exports, the Finance Minister proposed increasing the duty-free import limit of specific inputs used in seafood processing for export from 1% to 3% of the previous year’s export turnover’s FOB value.
Additionally, she suggested extending the duty-free import provision for specific inputs, currently applicable to leather or synthetic footwear exports, to include exports of shoe uppers. This initiative aims to bolster exports in these labor-intensive sectors to create more jobs and increase incomes.
Furthermore, the Finance Minister announced an extension of the time frame for exporting final products from six months to one year for exporters of leather or textile garments, leather or synthetic footwear, and other leather goods.
The Budget also includes exemptions from basic customs duty for capital goods used in manufacturing lithium-ion cells for batteries, now extended to those used in battery energy storage systems. Moreover, the import of sodium antimonate for solar glass manufacturing will be duty-free.
Moreover, the Budget proposes exempting customs duty on components and parts necessary for manufacturing civilian training and other aircraft. It also suggests duty exemptions on raw materials imported for manufacturing aircraft parts used in maintenance, repair, and overhaul by defense sector units.
To address under-utilization of manufacturing capacity in special economic zones (SEZs) due to global trade disruptions, Sitharaman introduced a one-time measure permitting eligible manufacturing units in SEZs to sell goods in the domestic tariff area at concessional duty rates.
In the nuclear power sector, the Finance Minister recommended extending the existing customs duty exemption on imports of goods for nuclear power projects until 2035, expanding the benefit to all nuclear plants regardless of capacity.
Furthermore, the Budget includes customs duty exemptions on the import of capital goods required for processing critical minerals within the country. Additionally, the central excise duty payable on biogas-blended compressed natural gas (CNG) will exclude the entire biogas value.
