Sitharaman announces various customs duty exemptions in 2026 Budget

Union Finance Minister Nirmala Sitharaman on Sunday proposed exemptions on customs duty while presenting the annual Budget for the financial year 2026-27 (FY27). The exemptions ranged across sectors, including critical minerals, nuclear energy, battery, electronics, defence, and aviation, among others.

 

The exemptions are aimed at simplifying tax rates, supporting domestic manufacturing, boosting exports, and removing old duty exemptions that are no longer needed. "My proposals for customs and central excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty," Sitharaman said.

 

Sitharaman also added that exemptions on items that are now made in India or rarely imported will be withdrawn. "To continue weeding out long continuing customs duty exemptions, I propose to remove certain exemptions on items which are being manufactured in India or where the imports are negligible," she said.

Relief for patients and promoting ease of living

Customs duty on goods imported for personal use will be cut from 20 per cent to 10 per cent, Sitharaman said.

 

To help patients, especially those with cancer, basic customs duty will be removed on 17 cancer-related medicines. Seven more rare diseases have been added to the list for duty-free imports.

Boost for marine, leather and textile exports

To support exports, the duty-free import limit for inputs used in seafood processing will increase from 1 per cent to 3 per cent of the free on board (FOB) value of the previous year’s export turnover. Duty-free imports of inputs will also be extended to exporters of shoe uppers, not just leather or synthetic footwear.

 

Exporters of leather, footwear and textile garments will get more time to ship finished goods, with the export period extended from six months to one year.

Electronics and SEZ units

To boost value addition in electronics, basic customs duty will be removed on certain parts used to make microwave ovens.

 

To help manufacturing units in Special Economic Zones that are facing low capacity use due to global trade disruptions, the government has proposed a one-time relief measure. Under this plan, eligible SEZ units will be allowed to sell some of their goods in the domestic market at lower import duty rates. However, the volume of these sales will be capped and linked to a fixed share of their exports.

Biogas blended CNG

Sitharaman also proposed to exclude the entire value of biogas while calculating the central excise duty payable on biogas-blended compressed natural gas.

Support for clean energy, nuclear power projects

The government will extend customs duty exemptions on goods used to make lithium-ion cells. This benefit will now also apply to battery energy storage systems. Customs duty exemption on sodium antimonate used for manufacturing solar glass will also continue.

 

Customs duty exemptions on goods imported for nuclear power projects will now continue till 2035. The benefit will apply to all nuclear plants, no matter their size or capacity.

Push for critical minerals processing

Goods needed to process critical minerals in India will be exempt from basic customs duty. This move aims to reduce dependence on imports and strengthen India’s supply chains.

Incentives for aviation manufacturing

Parts and components needed to manufacture aircraft will be exempt from basic customs duty. Raw materials imported to make aircraft parts will also get duty relief, helping civil and defence aviation.