India Reviews Customs Duty Concessions and Exemptions on 118 Products
Ahead of Budget 2027-28
1.
Scope of Review
o
Government has initiated a review of Basic Customs
Duty (BCD) concessions and exemptions covering 118 products ahead of the
Union Budget 2027-28.
o
The review covers concessions/exemptions due to
expire on 31 March 2027 and 30 September 2027.
o
BCD rates on the products under review range up to 30%.
o
Industry has been asked to provide inputs on
whether the existing relief should be continued, withdrawn or allowed to lapse.
2.
Two Categories Under Review
A. 32 Concessions / Concessional Duty Rates
o
Statutory review of concessional BCD rates
applicable to 32 products.
o
Products include:
§ Certain
fish oil.
§ Shuttleless looms.
§ Open
cells used in manufacturing Interactive Flat Panel Displays.
B. 86 Unconditional Exemptions
o
Full BCD exemptions without any post-import
conditions.
o
Major products include:
§ Fuel oil
and urea.
§ Certain
medicines, stents and probiotics.
§ Gallium
and germanium waste and scrap.
§ Lithium-ion
battery waste and scrap.
§ Goods
required for setting up power projects.
§ Components
for panel display modules.
§ Textile
machinery.
§ Certain
photovoltaic cells.
§ Drugs and
optical fibre cables.
3.
Industry Inputs Required
o
Line ministries have approached industry
stakeholders for detailed justification supporting continuation of
exemptions/concessions.
o
Submissions should include data on:
§ Domestic
production.
§ Import
volumes.
§ Existing
domestic manufacturing capacity.
§ Planned
investments.
o
Government will assess whether domestic production
can substitute for imports.
4.
Impact on Importers and Trade
o
Any withdrawal or modification of exemptions could
increase landed costs for importers.
o
Potential impact on imports of:
§ Capital
goods and textile machinery.
§ Power
project equipment.
§ Electronics
manufacturing components.
§ Renewable
energy equipment.
§ Batteries
and critical minor metals.
o
Changes could also affect cargo flows through ports
and Inland Container Depots (ICDs).
5.
Objective of the Exercise
o
Rationalisation of customs duty structure.
o
Correction of inverted duty structures.
o
Promotion of domestic manufacturing.
o
Reduction of unnecessary exemptions and
simplification of tariff rates.
6.
Government's Tariff Rationalisation Policy
o
FY 2026-27 Budget had already reviewed several
conditional and unconditional customs duty exemptions.
o
Certain concessional/nil-duty benefits were
withdrawn, while others were extended.
o
Major sectors receiving continued or revised
benefits included:
§ Exports
and renewable energy.
§ Semiconductors
and pharmaceuticals.
§ Medical
devices.
§ Aircraft
manufacturing and MRO.
§ Nuclear
power and electric mobility.
o
Specific duties on certain consumer goods,
including umbrellas, were also revised.
7.
Target for Budget 2027-28
o
Finance Minister Nirmala Sitharaman has indicated
the government's intention to bring customs duty rates on most products down to
single-digit levels by Budget 2027-28.
8.
Present Status
o
The government has not officially disclosed the
complete list of 118 products.
o
No final decision has been announced on
continuation, withdrawal or expiry of the existing concessions and exemptions.
Key
Takeaway: The
review of 118 products signals another round of customs tariff rationalisation
ahead of Budget 2027-28. Importers should assess their dependence on existing
BCD exemptions and prepare evidence-based representations for their
continuation.
[ABS News Service/03.11.2026]
India has
begun reviewing basic customs duty concessions and exemptions covering 118
products ahead of the 2027-28 Union Budget, a move that could reset landed
costs for importers and reshape cargo flows through the country’s ports and
inland container depots. The exercise covers a statutory review of concessions
that expire on 31 March and 30 September 2027, according to people familiar
with the discussions.
Line
ministries have approached industry to seek inputs on whether each exemption or
concessional rate should continue, be withdrawn or be allowed to lapse. The
basic customs duty rate on the goods under scrutiny ranges up to 30 per cent.
Two tracks: 32
concessions and 86 exemptions
The review
splits the list into two distinct categories. Customs duty concessions and
concessional rates on 32 products are up for statutory review, including
certain fish oil, shuttleless looms and open cells
used to manufacture interactive flat panel displays. The remaining 86 goods
carry unconditional exemptions — full duty waivers that do not require
importers to meet any post-import conditions.
Unconditional
exemptions under review include fuel oil, urea, some medicines, stents and
probiotics, as well as waste and scrap of critical minor metals such as gallium
and germanium and waste of lithium-ion batteries. Other items on the combined
list include goods required to set up power projects, components for panel
display modules, textile machinery, battery scrap, certain photovoltaic cells,
drugs and optical fibre cables.
What it means
for importers and customs brokers
For trade
intermediaries, the outcome of the review will determine duty incidence on a
wide spread of containerised imports, ranging from capital goods such as
textile machinery and power project equipment to high-value components for
electronics manufacturing and renewable energy supply chains.
Industry has
been asked to submit detailed justification supported by data on domestic
production, imports, existing capacity and planned investment in these goods.
That means importers making a case for continued relief will need to document
how far domestic capacity can actually substitute for overseas supply, rather
than rely on the volume of past shipments alone.
An official
described the exercise as routine. “Duty review and rationalisation is a
routine exercise done to correct the inverted duty structure and promote local
manufacturing,” the official said.
Tariff
rationalisation stays the theme
The review
follows a year in which tariff rationalisation was a central theme of the FY27
Budget, with a large set of conditional and unconditional exemptions examined —
several extended, others allowed to lapse and sunset clauses removed. The
measures included withdrawing certain concessional or nil duties, alongside
extended benefits for exports, renewable energy, semiconductors,
pharmaceuticals, medical devices, aircraft manufacturing and MRO, nuclear power
and electric mobility. Specific duties on some consumer goods, such as
umbrellas, were also revised.
Finance
Minister Nirmala Sitharaman has said the government intends to bring customs
duty on most items down to single-digit levels by the 2027-28 Budget,
suggesting the direction of travel is a simpler, leaner tariff structure even
as individual exemptions are pruned.
The government
has not publicly confirmed the product list, and no final decision on the 118
items has been announced.
FAQs
1. How many
products are covered by the customs duty review?
The review covers 118 goods in total — 32 products with concessions or
concessional rates that face a statutory review, and 86 goods that currently
enjoy unconditional exemptions.
2. When do
these concessions expire?
The exemptions and concessions under review lapse on 31 March 2027 or 30
September 2027, which is why they are being examined as part of the 2027-28
budget exercise.
3. What is the
highest duty rate involved?
The basic customs duty rate on the goods under review goes up to 30 per
cent, though the report did not match specific rates to individual items.
4. Why is the
government reviewing these exemptions?
Officials describe it as a routine rationalisation exercise aimed at
correcting the inverted duty structure, where input duties exceed those on
finished goods, and at encouraging domestic manufacturing. Industry has been
asked to justify continued relief with data on local output, import volumes,
capacity and investment plans.
5. Which
sectors are most exposed?
Electronics and display manufacturing, textiles and textile machinery,
power projects, renewable energy and battery supply chains, pharmaceuticals and
medical devices, and metals scrap appear most frequently on the list, along
with everyday inputs such as fuel oil and urea.