India is preparing a fresh round of customs duty reforms in the FY27 Union Budget to speed up cargo movement at ports and further rationalise the tariff structure, people familiar with the matter told Mint. The measures are expected to make cross-border trade simpler, faster and more cost-effective.
The government’s broader customs strategy for FY27 will also aim to support Indian businesses in diversifying export destinations, helping them cushion the impact of global trade volatility, the people said.
Intensive pre-Budget consultations are under way to simplify customs procedures, improve last-mile connectivity to ports and expand automation so consignments can clear ports more quickly, one of the people said, requesting anonymity.
At present, the average turnaround time at Indian ports is around 48 hours, compared with less than a day at major global hubs such as Hong Kong. Policymakers want to narrow this gap substantially, as longer port stays raise costs for shipping lines, delay deliveries and push up freight expenses, the person added.
Finance minister Nirmala Sitharaman had earlier said at the ‘HT Leadership Summit 2025’ that overhauling India’s customs duty regime-by selectively lowering rates, enhancing transparency and curbing discretionary powers-would be the next major thrust of economic reforms.
India has already made notable progress on port efficiency. Average vessel turnaround time has improved from about 93 hours in 2013-14 to roughly two days in 2023-24, with Jawaharlal Nehru Port in Navi Mumbai leading at about 26 hours. A World Bank report released in September ranked the port 10th globally for improvement in performance between 2020 and 2024.
Alongside process reforms, the government is examining the possibility of cutting the number of core customs tariff rates from the current eight, following reductions announced in the February 2023 and February 2025 budgets that phased out 14 tariff slabs. India currently has eight core rates-zero, 5%, 10%, 15%, 20%, 30%, 50% and 70%-excluding higher levies on items such as wine and alcohol. Preferential rates under free trade agreements continue to apply.
Officials are also reviewing duty rates on specific products to align customs policy with industrial priorities. The aim is to keep costs of imported raw materials and machinery low, while ensuring adequate tariff protection for domestic manufacturers of intermediate and finished goods as India pushes for deeper backward integration.
Trade policy considerations will be central to this exercise. While one option is to move closer to the simpler tariff structures seen in developed economies, any further reduction in tariff slabs will be calibrated with India’s trade diversification strategy. Blanket, upfront duty cuts could weaken India’s negotiating position in future trade talks, one of the people said.
Queries sent to the finance ministry and the Central Board of Indirect Taxes and Customs did not receive a response.
An tax expert said that the proliferation of tariff rates and frequent changes over time have increased complexity, compliance costs and disputes. He added that the Budget offers a chance to bring greater predictability and align customs policy with long-term trade and manufacturing goals. Mohan noted that reducing the number of tariff rates and reforming the structure along the lines of a GST 2.0 approach could significantly improve ease of doing business, Mint reported.
