What to expect from India’s customs reforms

Subscribe to enjoy similar stories. New Delhi: Indian businesses and the country’s trading partners alike have flagged the need for a simpler customs duty framework. The global supply-chain disruptions and US tariffs have further amplified the need to review the regime.

Finance minister Nirmala Sitharaman has called it the next “clean-up" exercise after the income tax and goods and services tax reforms. As part of the customs duty reform, the government aims to streamline regulatory architecture to reduce costs and make the economy more efficient and appealing to investors. Mint explains what to expect: Global supply-chain disruptions and the US tariff shock have hurt India’s exporters, making customs regime reforms a priority for the government.

Most exporters are also importers of raw materials, capital goods and intermediate goods. Easing the duty structure will ease costs for them. Moreover, delays at ports for clearance of consignments add to the cost of doing business.

Streamlining the customs regime has become critical as India aspires for closer integration with the global supply chain and a higher share of global trade. Finance minister Nirmala Sitharaman restructured customs duty slabs and rates in the February 2025 budget. The latest reform is targeted at enhancing India’s manufacturing competitiveness and transparency in customs administration.

India needs to simplify customs procedures to improve the ease of doing business. Another major issue is the inversion of duty in some industries. That is, the import of raw materials and components attracts a higher basic customs duty (BCD) than the import of finished products.