FM Sitharaman Signals Major Customs Overhaul Ahead of 2026 Budget

Finance Minister Nirmala Sitharaman has indicated that the Indian government is preparing a comprehensive overhaul of the customs regime, describing it as the “next big clean-up” in India’s trade and taxation framework. The reforms, expected to feature in the 2026 Union Budget, aim to simplify procedures, rationalise duties, and improve ease of doing business for importers and exporters.

Speaking at a recent summit, the Minister highlighted that the current customs framework, while functional, contains multiple layers of complexity that often create compliance challenges and administrative hurdles for businesses. She emphasised that the goal is to create a system that is transparent, predictable, and efficient, reducing the bureaucratic burden without compromising regulatory oversight.

Among the potential measures under consideration are a reduction in the number of customs duty slabs, reassessment of tariff rates to ensure they are in line with global standards, and simplification of classification procedures. These steps are intended to provide clarity to businesses and minimise disputes related to duty classification or valuation. The Finance Ministry has also indicated that the reforms will maintain safeguards against smuggling and illicit trade, balancing simplification with enforcement.

The proposed changes would build on reforms introduced over the past few years, during which the government cut multiple tariff rates and eliminated redundant duty slabs. By rationalising rates further and streamlining processes, the government aims to make customs compliance more straightforward for both small and large businesses, enhancing India’s competitiveness in international trade.

Officials suggest that a more predictable and simplified customs regime could also support domestic manufacturing, facilitate imports of critical inputs, and reduce the time and cost associated with cross-border transactions. Analysts say such reforms, if implemented, could improve India’s ranking in global trade efficiency indices and contribute to a more investor-friendly environment.

Sitharaman’s announcement underscores the government’s broader commitment to tax and regulatory reform. With the Budget approaching, businesses, trade bodies, and policymakers are closely watching for detailed proposals, which could mark a significant step toward modernising India’s customs system while supporting economic growth and trade facilitation.