Budget 2026-27 rolls out customs duty relief to boost manufacturing, exports
Finance Minister Nirmala Sitharaman rolled out a range of customs duty cuts across sectors such as marine products, textiles, leather, and defence and aviation sectors to boost manufacturing and increase exports in the Union Budget 2026-27 presented in the Lok Sabha on Sunday.
As part of sector-specific measures to promote exports of marine products, the Finance Minister proposed to raise the limit for duty-free imports of specified inputs used for processing seafood for export from 1 per cent to 3 per cent of the FOB (free-on-board) value of the previous year’s export turnover.
She also proposed to extend the existing facility of duty-free imports of specified inputs, currently available for exports of leather or synthetic footwear, to exports of shoe uppers. The move is aimed at boosting exports in these labour-intensive sectors to boost jobs and incomes.
The time period for export of the final product will be extended from six months to one year for exporters of leather or textile garments, leather or synthetic footwear and other leather products, Sitharaman said.
The Finance Minister also announced the extension of the basic customs duty exemption available on capital goods used for manufacturing lithium-ion cells for batteries to those used for battery energy storage systems as well. Besides, the import of sodium antimonate for use in the manufacture of solar glass will be exempted from customs duty.
The Budget has provided for exempting customs duty on components and parts required for manufacturing civilian training and other aircraft. It also proposed duty exemption on raw materials imported for manufacturing aircraft parts used in maintenance, repair and overhaul by defence sector units.
The Finance Minister proposed exempting BCD on specified parts used in the manufacture of microwave ovens.
In order to tackle the problem of under-utilisation of manufacturing capacity in special economic zones (SEZs) due to global trade disruptions, Sitharaman announced a one-time measure to allow eligible manufacturing units in SEZs to sell goods in the domestic tariff area at concessional rates of duty.
In the nuclear power sector, the Finance Minister proposed extending the existing customs duty exemption on imports of goods required for nuclear power projects till 2035, while also expanding the benefit to all nuclear plants irrespective of capacity.
The Budget also provides for customs duty exemption on the import of capital goods required for processing critical minerals in the country.
The entire value of biogas will be excluded while calculating the central excise duty payable on biogas-blended compressed natural gas (CNG), Sitharaman said
