The Centre plans to continue tariff rationalisation over the next two years.
The move aims to simplify the tax structure, support trade and improve India’s competitiveness.
Highlights
- Government aims to bring customs duty on most items to single-digit rates by the FY28 Budget.
- Finance Minister Nirmala Sitharaman said only a few items may continue to attract higher duties.
- India has already reduced the number of customs duty slabs from multiple rates to eight, including zero duty.
- Average customs duty has declined to 10.66% from 11.65% after recent reforms.
- The Centre said borrowing should be focused on creating productive assets and infrastructure.
- States have also been advised to prioritise asset creation while managing public debt responsibly.
The Central government plans to continue simplifying India’s customs duty structure and aims to reduce customs duty on most imported goods to single-digit rates by the Union Budget for FY2027-28.
Speaking at the National Council of Applied Economic Research (NCAER) India Policy Forum, Finance Minister Nirmala Sitharaman said the government has already made significant progress in tariff rationalisation and expects that, except for a limited number of sensitive items, most products will attract single-digit customs duties by FY28.
According to the finance minister, customs duty reforms are the next major step after the government rationalised corporate tax, income tax and the Goods and Services Tax (GST) over the past several years.
For consumers, lower customs duties could eventually make imported raw materials, electronic components and several manufactured goods more affordable. Businesses may also benefit from lower input costs, improving India’s competitiveness in global manufacturing and exports. However, the actual impact on retail prices will depend on global commodity prices, currency movements and company pricing decisions.
The government has already reduced the number of basic customs duty slabs to eight, including the zero-duty category. Several tariff rates were removed in recent Budgets as part of the ongoing reform process. As a result, India’s average customs duty has declined from 11.65% to 10.66%.
The finance minister also spoke about the government’s borrowing strategy, stressing that debt should primarily be used for creating productive assets such as roads, railways, ports and other infrastructure rather than financing routine expenditure.
She said the Centre’s increased capital expenditure over the past few years has encouraged private investment and supported economic growth. Sitharaman also advised state governments to follow a similar approach by borrowing responsibly while strengthening their own revenues to reduce the long-term debt burden.
The proposed customs duty reforms are expected to remain an important part of the government’s broader strategy to improve ease of doing business, strengthen manufacturing and support India’s long-term economic growth.
