Big Boost To Exports In Budget 2026: FM Sitharaman Announces Major Customs Duty Cuts To Support Manufacturing

Union Finance Minister Nirmala Sitharaman on Sunday unveiled a wide range of customs duty and policy changes in the Union Budget 2026-27.

The measures are aimed at boosting exports, supporting domestic manufacturing, and reducing costs for key industries such as textiles, leather, renewable energy, aviation and nuclear power.

Export Boost for Marine, Leather and Textile Sectors

To promote exports of marine products, the Finance Minister proposed increasing the limit for duty-free import of specified inputs used in seafood processing. The cap has been raised from 1 per cent to 3 per cent of the previous year's export turnover based on Free on Board (FOB) value.

She also announced the extension of duty-free imports of specified inputs to shoe uppers, a facility that was earlier available only for leather and synthetic footwear exports. In addition, the time allowed for exporting finished products has been extended from six months to one year for exporters of leather garments, textile garments, footwear and other leather products.

Support for Clean Energy and Battery Manufacturing

Sitharaman proposed extending the basic customs duty (BCD) exemption on capital goods used for manufacturing lithium-ion cells to include battery energy storage systems. This move is expected to support India's clean energy and storage ecosystem.

She also announced a BCD exemption on the import of sodium antimonate, a key input used in the manufacture of solar glass. Further, capital goods required for processing critical minerals will also be exempted from customs duty, helping reduce dependence on imports and supporting domestic value addition.

Relief for Nuclear Power and Aviation Sectors

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. The benefit will now apply to all nuclear plants, regardless of their capacity.

The Budget also proposed duty exemptions for the aviation sector. BCD will be removed on components and parts required for manufacturing civilian training aircraft and other aircraft. Raw materials imported for making aircraft parts used in maintenance, repair and overhaul (MRO) by defence sector units will also be exempted.

SEZs, Biogas and Consumer Appliances

Addressing concerns over under-utilisation of manufacturing capacity in special economic zones (SEZs), Sitharaman announced a one-time measure allowing eligible SEZ units to sell goods in the domestic tariff area at concessional duty rates.

She also said the entire value of biogas will be excluded while calculating central excise duty on biogas-blended compressed natural gas (CNG), offering relief to the green energy sector.

Additionally, the Finance Minister proposed exempting BCD on specified parts used in the manufacture of microwave ovens, supporting local appliance manufacturing.

Continued Push for Domestic Manufacturing

The Budget builds on previous reforms aimed at strengthening domestic production. Sitharaman recalled that earlier measures included customs duty exemptions on capital goods for EV battery and mobile phone battery manufacturing, along with duty-free imports of several critical minerals.

Steps taken in recent budgets to support textiles, leather, electronics and shipbuilding were also highlighted, including reduced duties on raw materials and extended exemptions to encourage job creation and investment.

With these wide-ranging customs duty reforms, Budget 2026-27 seeks to improve export competitiveness, attract investment, and strengthen India's manufacturing base across multiple sectors.