Indian Union Budget 2026: Revised Customs Duty Rates & Trade Reforms
On 1 February 2026, Union Finance Minister Nirmala Sitharaman presented India’s Union Budget 2026-27, with a strong focus on enhancing economic growth, improving export competitiveness, and modernising trade policy. A central plank of this year’s reforms was the overhaul of customs duty structures, aimed at simplifying tariffs, reducing costs for key sectors, and aligning India’s trade regime with global realities.
Key Customs Duty Rate Revisions
1. Customs Duty on Personal Imports Halved
One of the most consumer-friendly moves in Budget 2026 was the reduction of customs duty on goods imported for personal use — from 20% to 10%. This applies to all dutiable personal imports, including gifts and shipments bought via e-commerce. The measure is designed to rationalise tariffs and make personal imports more affordable.
2. Rationalisation & Simplification of Duty Structure
The Budget introduced broader customs duty rationalisations to reduce complexities and remove outdated exemptions. The tariff framework was realigned to support domestic manufacturing and eliminate duty inversions (where raw materials attract higher tax than finished goods).
Sectoral Duty Relief & Exemptions
Budget 2026 went beyond headline rate adjustments to deliver targeted sectoral incentives:
🔬 Healthcare & Medicines
Significant customs duty waivers were announced for critical medicines, including cancer drugs and treatments for rare diseases, under government health initiatives. This move is intended to make essential healthcare more affordable.
🖥️ Tech & Electronics
Customs duty exemptions were extended for equipment used by foreign film and TV crews, as well as certain electronics manufacturing inputs — supporting India’s burgeoning creative and tech industries.
Customs Procedures & Compliance Reforms
Aside from rate cuts, the Budget also introduced several non-rate reforms aimed at trade facilitation:
✔ Deferred Duty Payments: Extended timelines for eligible importers to ease working capital pressures.
✔ New Baggage Rules (2026): Rationalised baggage provisions for travelers, streamlining personal import regulations.
✔ Customs Digitalisation: Push toward integrated customs systems and streamlined declaration processes.
Why These Changes Matter
The revised customs duty framework has multiple strategic implications:
📈 Boost to Exports & Competitiveness
Simplification and duty relief help Indian exporters reduce input costs, making Indian goods more price-competitive in international markets. This comes at a time when global trade tensions and tariffs imposed by other major economies have impacted key sectors.
🏭 Support to Domestic Manufacturing
By rationalising duties, India aims to reduce tariff inversions and rebalance the cost structures for manufacturers, particularly in sectors such as electronics, renewable energy, and machinery.
🛍️ Consumer Benefits
The 50% cut in personal import duties directly benefits consumers through lower landed costs for items imported for personal use.
⚖️ Trade Policy Alignment
These reforms indicate a progressive alignment of India’s tariff policy with evolving global trade norms — especially against a backdrop of strategic trade agreements and geopolitical shifts
Summary
While 2026’s customs duty reforms are broad and impactful, several industry players and trade analysts see this as a stepping stone toward deeper tariff rationalisations in future budgets. Continued focus on digital customs infrastructure, enhanced trade facilitation, and sector-specific incentives may further improve India’s trade competitiveness.
For businesses — especially in manufacturing, export-oriented industries, and import-dependent sectors — staying informed on tariff updates and compliance reforms can unlock significant cost savings and strategic advantages.