The Union Budget 2025-26 rationalises customs tariffs, removing 7 rates for industrial goods. 36 life-saving drugs get duty exemption, EV battery manufacturing gets a boost, and measures are in place to support domestic manufacturing and exports.
The Union Budget 2025-26, presented by Finance Minister Smt. Nirmala Sitharaman, proposes sweeping reforms in customs tariffs, manufacturing incentives, and trade facilitation. The key highlights include the removal of seven customs tariff rates for industrial goods, exemptions for life-saving medicines, and significant support for EV and mobile battery manufacturing.
Tariff Rationalization & Relief Measures
Continuing the overhaul of customs duty structures, the government will remove seven more customs tariff rates for industrial goods, leaving only eight, including the ‘zero’ rate. Additionally, the Social Welfare Surcharge will be exempted on 82 tariff lines subject to a cess, simplifying the taxation structure.
Healthcare Boost: Customs Relief on Life-Saving Medicines
To aid patients battling cancer, rare diseases, and chronic illnesses, the budget proposes:
- Full exemption on 36 life-saving medicines from Basic Customs Duty (BCD).
- A concessional 5% BCD on six additional life-saving drugs.
- Expansion of the Patient Assistance Program, adding 37 medicines and 13 new programs.
Support for E-Mobility & Battery Manufacturing
- Exemption of BCD on 35 new capital goods for EV battery production.
- Exemption of BCD on 28 capital goods for mobile phone battery manufacturing.
- Full BCD exemption on critical minerals like cobalt powder, lithium-ion battery scrap, lead, and zinc to boost local production.
Manufacturing & Infrastructure Development
- Exemption of BCD on shuttle-less looms to support domestic technical textiles.
- Revised BCD rate on knitted fabrics to enhance competitive pricing.
- Increased BCD on Interactive Flat Panel Displays (IFPDs) from 10% to 20%, reducing the inverted duty structure.
- Extension of BCD exemption for shipbuilding and shipbreaking for another 10 years.
- BCD cut on Carrier Grade Ethernet Switches from 20% to 10% to align with Non-Carrier Grade switches.
Export Promotion & Trade Facilitation
- Extension of handicraft export timelines from six months to one year.
- Nine more handicraft items were added to the duty-free input list.
- Export duty exemption on crust leather and BCD waiver on wet blue leather to support small tanners.
- Reduction of BCD on frozen fish paste (Surimi) from 30% to 5% to boost seafood exports.
- BCD cut on fish hydrolysate for shrimp and fish feed production.
- Extension of MRO service timelines for railway goods to one year, matching aircraft and ship repair norms.
Ease of Doing Business
- Two-year limit (extendable by one year) for finalising provisional customs assessments to reduce trade uncertainty.
- New provision allowing voluntary duty payment post-clearance without penalty to promote compliance.
- The end-use compliance timeline for imported inputs extended from six months to one year, with reduced filing requirements.
The finance minister emphasised that these measures will not only boost domestic manufacturing and exports but also simplify trade operations, making India a more competitive global market player.
(SOURCE: PIB Delhi)
