Budget 2026: FM proposes key customs duty changes to support exports and manufacturing
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Finance minister Nirmala Sitharaman on Sunday unveiled a wide-ranging set of customs duty and policy measures in the Union Budget 2026-27. As part of sector-specific measures to promote exports of marine, leather and textile products, the finance minister proposed to raise the limit for duty-free imports of specified inputs used for processing seafoods for export from 1% to 3% of the FOB value of the previous year’s export turnover.
She also proposed extending the existing facility for duty-free imports of specified inputs, currently available for exports of leather or synthetic footwear, to exports of shoe uppers.
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.
Proposals on extending basic customs duty
Sitharaman proposed extending the basic customs duty (BCD) exemption available on capital goods used for manufacturing lithium-ion cells for batteries to those used for battery energy storage systems as well. She also announced a BCD exemption on the import of sodium antimonate for use in the manufacture of solar glass.
January 2026
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In the nuclear power sector, the finance minister proposed extending the existing BCD 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 proposed a BCD exemption on the import of capital goods required for processing critical minerals in the country.
Sitharaman said the entire value of biogas will be excluded while calculating central excise duty payable on biogas-blended compressed natural gas (CNG).
The Budget proposed exempting BCD 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.
Addressing concerns over the 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.