Finance Minister Nirmala Sitharaman, during her presentation of the Union Budget 2026-27 in Parliament, highlighted key proposals aimed at simplifying the tariff structure, supporting domestic manufacturing, boosting export competitiveness, and rectifying duty inversion. One significant change is the reduction of the tariff rate on imported dutiable goods for personal use from 20% to 10% to streamline customs duties.
In a move to assist patients, especially those with cancer, the Budget suggests exempting basic customs duty on 17 drugs. Additionally, it plans to include 7 more rare diseases for duty exemption on personal imports of drugs, medicines, and Food for Special Medical Purposes (FSMP) used in treatment. The revised rules for baggage clearance during international travel aim to address passenger concerns by enhancing duty-free allowances and providing clarity on temporary goods carriage.
The Budget introduces various measures to streamline customs processes for smoother and faster goods movement and increased trade certainty. Notable proposals include extending the duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators (AEOs) from 15 to 30 days. Moreover, eligible manufacturer-importers will be encouraged to obtain full-fledged Tier 3-AEO accreditation to access the same duty deferral facility.
Furthermore, the Budget suggests extending the validity of advance rulings binding on Customs from 3 to 5 years. Government agencies are urged to utilize AEO accreditation for preferential cargo clearance treatment. Recognizing regular importers with trusted supply chains in the risk system aims to minimize cargo verification needs, enhancing operational efficiency.
Export cargo will benefit from electronic sealing for clearance from factory premises to ships, while trusted importers can automatically notify Customs for goods clearance upon arrival without compliance needs. Sitharaman also announced plans to revamp the Customs warehousing framework into a warehouse operator-centric system with self-declarations, electronic tracking, and risk-based audits to reduce delays and compliance costs.
