New Delhi: In a significant move aimed at simplifying customs procedures, easing the burden on citizens, and enhancing India’s export competitiveness, the Union Budget 2026–27 on Saturday announced a series of reforms in Customs and Central Excise. Presenting the Budget in Parliament, Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman said the proposals seek to rationalise the tariff structure, support domestic manufacturing, promote trust-based systems, and reduce transaction costs for trade and industry.
The announcements form part of the government’s broader effort to align customs administration with the objectives of Ease of Living and Ease of Doing Business, while correcting duty inversions and strengthening India’s integration with global supply chains.
Relief for Individuals and Patients
One of the most impactful measures announced in the Budget is the reduction of tariff rates on all dutiable goods imported for personal use from 20 per cent to 10 per cent. The move is expected to provide immediate relief to international travellers and individuals importing goods for personal consumption, while rationalising the customs duty structure.
In a major relief for patients, particularly those undergoing critical treatments, the Budget proposes to exempt Basic Customs Duty on 17 drugs or medicines, with a special focus on cancer patients. Further extending healthcare-related relief, the government announced that seven more rare diseases will be added to the list eligible for exemption from import duties on personal imports of drugs, medicines, and Food for Special Medical Purposes (FSMP) used in their treatment.
These measures are expected to significantly lower the cost of life-saving medicines and specialised nutritional products for patients and families dependent on imports.
Passenger-Friendly Baggage Rules
Addressing long-standing concerns of international travellers, the Budget proposes to revise provisions governing baggage clearance during international travel. The revised rules will enhance duty-free allowances and bring greater clarity on the temporary carriage of goods brought into or taken out of the country. According to the Finance Minister, the changes are designed to ensure fairness, reduce disputes at ports of entry, and make travel more convenient for genuine passengers.
In another taxpayer-friendly initiative, the Budget allows honest taxpayers to settle outstanding dues and close cases by paying an additional amount in lieu of penalties, offering a quicker and less adversarial route to dispute resolution.
Faster and Smarter Customs Processes
To ensure smoother and faster movement of goods, the Budget announced multiple measures aimed at minimising human intervention and increasing automation in customs processes. The emphasis is on creating greater certainty for trade while reducing delays at ports, airports, and land customs stations.
Export cargo using electronic sealing will now be eligible for clearance directly from factory premises to the ship, significantly reducing handling time and logistics costs. For imports that do not require compliance checks, the filing of a bill of entry by a trusted importer and the arrival of goods will automatically trigger customs clearance formalities, eliminating unnecessary procedural hurdles.
Strengthening Trust-Based Systems
A key reform announced in the Budget relates to Authorised Economic Operators (AEOs). The duty deferral period for Tier 2 and Tier 3 AEOs has been enhanced from 15 days to 30 days, providing greater liquidity and operational flexibility to trusted trade partners.
The Finance Minister also announced that eligible manufacturer-importers will be extended the same duty deferral facility, encouraging them to seek full-fledged Tier 3 AEO accreditation over time. In addition, the validity period of advance rulings binding on Customs has been extended from three years to five years, providing long-term certainty to businesses.
Government agencies will also be encouraged to leverage AEO accreditation for preferential cargo clearance. Regular importers with long-standing, trusted supply chains will be recognised within the customs risk management system, reducing the need for repeated verification of consignments.
Warehousing Reforms to Cut Compliance Costs
In another major structural reform, the Finance Minister announced that the Customs warehousing framework will be transformed into a warehouse operator-centric system. The new system will rely on self-declarations, electronic tracking, and risk-based audits, replacing the current officer-dependent approval mechanisms.
“These reforms will significantly reduce transaction delays, improve transparency, and lower compliance costs for businesses,” Sitharaman said, adding that the changes will make India’s warehousing and logistics ecosystem more efficient and globally competitive.
A Trade-Friendly Customs Regime
Overall, the customs and excise proposals in Union Budget 2026–27 signal a decisive shift towards a simpler, more predictable, and trust-based customs regime. By combining tariff rationalisation, patient-centric relief, automation, and institutional reforms, the government aims to strengthen India’s trade facilitation framework while improving the everyday experience of citizens and businesses alike.
Industry and trade bodies have welcomed the measures, noting that faster clearances, lower duties, and reduced compliance burdens will enhance India’s attractiveness as a manufacturing and export hub in an increasingly competitive global environment.
