Quick Take
- FM Nirmala Sitharaman said tariff cuts will continue in the 2027-28 (FY28) Budget, at NCAER’s India Policy Forum.
- She aims to bring customs duty on most items to single digits, barring about 13 items still under review.
- India’s average customs rate has already fallen to 10.66% from 11.65%, per government estimates, aiding manufacturers.
In This Article
Tariff Rationalisation to Continue in the Budget for 2027-28 (FY28), Finance Minister Nirmala Sitharaman said on Thursday, with a goal to cut customs duty on most items to single-digit rates. She spoke at the National Council of Applied Economic Research (NCAER) India Policy Forum in New Delhi.
The Finance Minister said only about 13 items now sit outside the rationalised rate structure. Customs duty reform is the government’s next priority, following changes to corporate tax, income tax, and the Goods and Services Tax (GST) over the past six years. The push aims to make Indian industry more competitive and simplify trade.
StartupFeed Insight
The real signal is not the headline rate but the shrinking exception list, now down to roughly 13 items. Founders in electronics, EV, and deep-tech hardware should watch this closely, because lower input duties directly cut the landed cost of imported components and machinery. Cheaper inputs improve gross margins for firms that assemble or manufacture in India. We expect the FY28 Budget, due around February 2027, to publish a concrete single-digit slab map for most industrial goods, giving importers a clearer 12-month planning window. StartupFeed will track each slab change as it lands. By Harshvardhan Jain.
What the FY28 tariff plan says
The FY28 tariff plan is a stated intent to bring customs duty on most goods down to single-digit rates by the 2027-28 Budget. Sitharaman said that, barring a few items, duties should reach single digits by then. She noted that even now, only about 13 items remain outside the rationalised structure, according to the Finance Minister’s remarks at the NCAER forum.
The government has already cut the number of basic customs duty slabs to eight, including a ‘zero’ rate. This step is meant to simplify the tariff structure and reduce disputes over how goods are classified. You can read the official customs proposals in the Ministry of Finance release via the Press Information Bureau budget statement.
Why does Tariff Rationalisation to Continue matter?
Tariff Rationalisation to Continue matters because it lowers the cost of imported inputs for Indian factories. Lower and simpler duties help domestic manufacturers compete, ease trade, and support the ‘Make in India‘ goal, the government has said.
“Maybe by the Budget of 2027-28, I’d be able to say that, barring a few items, it will come down to single digits,” Sitharaman said at the NCAER India Policy Forum.
Simpler slabs also answer a long-standing external critique. The exercise helps counter the view, pushed by some developed nations, that India runs one of the highest tariff structures. A cleaner rate card makes the system easier to defend in trade talks.
How far has India cut duties so far?
India’s average customs duty rate has fallen to 10.66% from 11.65%, according to government estimates. The bulk of the recent cuts came through two rounds of slab removals across successive Budgets.
| Metric | Detail | Notes |
|---|---|---|
| Announcement | FY28 tariff intent | Stated at NCAER India Policy Forum, New Delhi |
| Target | Single-digit duty on most items | Barring about 13 items still under review |
| Current slabs | 8 basic customs duty rates | Includes a ‘zero’ rate |
| Slabs removed | 7 in FY26 + 7 in FY24 | Two rounds of rationalisation |
| Average rate | 10.66% (from 11.65%) | Government estimate |
| Next Budget | FY28 (2027-28) | Expected around February 2027 |
The most striking number is the slab count. Fourteen rates were pulled across two Budgets to reach the current eight, which is why classification disputes and duty inversion are now easier to fix.
About the Finance Ministry’s tariff push
The Union Ministry of Finance leads India’s customs and tax policy, headed by Finance Minister Nirmala Sitharaman. The current tariff rationalisation began with a review promised in July 2024. It sits alongside earlier reforms to corporate tax, personal income tax, and GST. The Central Board of Indirect Taxes and Customs (CBIC) administers the customs rate structure. The stated aim is a simpler, more competitive tariff system aligned with global supply chains.
What does this mean for founders?
For founders, lower customs duty on inputs means a lower landed cost for imported parts and capital goods. That helps hardware, electronics, and EV startups that build or assemble products in India protect their margins.
“You need to have debt. I don’t think any country can run on its own resources,” Sitharaman said, framing public spending as a driver of private-sector risk-taking, at the NCAER forum.
The FY26 Budget had already exempted basic customs duty on the scrap of lithium-ion batteries, cobalt, and several critical minerals, per the Ministry of Finance. Deep-tech and clean-energy founders should map their component bills against the shrinking duty list. What makes this reform stand out is its direction of travel: fewer slabs, fewer exceptions, and a clearer path to single digits.
What’s Next
The key milestone is the FY28 Union Budget, expected around February 2027, where a single-digit slab map for most industrial goods could be spelt out. Between now and then, watch for pre-Budget consultations and any interim notifications on the remaining 13 items. Will a simpler tariff card finally close the gap between India’s rates and its ASEAN peers?
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