Budget FY26: Govt could cut customs duty on raw materials to boost manufacturing, say tax experts

New Delhi: The government could reduce customs duty on inputs used in manufacturing medical equipment, electronic goods and footwear industries in the forthcoming Budget to boost local manufacturing, according to tax experts.

Deloitte India Partner, Indirect Tax, Harpreet Singh said key demands from the Customs side from the FY26 Budget would be rate rationalisation, simplification of the regime, and litigation and dispute management.

“In the lines of the phased manufacturing plan, we expect some duty cuts in raw materials in electronics, home appliances, healthcare products, and pharmaceuticals. These are the industries where the government wants to give impetus in terms of manufacturing, and hence, we will see the raw materials declining in these sectors,” Singh said.

On the proposed Customs duty rationalisation announced in the Budget in July 2024, Singh said the sectors which could see rationalisation are healthcare, manufacturing of medical equipment, white goods, electronics, footwear and toys. The FY25 Budget announced that a comprehensive review of the Customs Duty rate structure will be undertaken over the next six months to rationalise and simplify it for ease of trade, removal of duty inversion and reduction of disputes.

To reduce classification disputes, the Budget had announced a review of the customs duty rates. Currently, there are more than a dozen customs duty rates, and the government is looking at reducing the number of rate slabs to 4 or 5. PTI