Leading Indian industry bodies have initiated discussions and submitted recommendations to the Ministry of Finance, advocating for a significant overhaul of customs duty structures and clearance processes ahead of the Union Budget 2026. The primary demand centers on implementing Goods and Services Tax (GST)-style simplification to reduce complexity, enhance predictability for businesses, and streamline the flow of goods across borders. These proposals aim to improve India's competitive standing in global trade and support domestic manufacturing initiatives.

The industry's push for reform stems from a desire to reduce the current compliance burden and operational costs associated with importing and exporting goods. Current customs procedures, while undergoing modernization, still present challenges related to multiple duty rates, classification ambiguities, and varying interpretations of regulations. By seeking a GST-like framework, industry representatives envision a unified, transparent, and more efficient system that could parallel the improvements seen in indirect taxation since the implementation of GST in 2017.

Key aspects of the proposed simplification include the reduction of numerous duty slabs, consolidation of various cesses and surcharges into fewer categories, and the establishment of a clearer input tax credit mechanism for customs duties. Industry stakeholders highlight that such changes would not only make it easier for businesses to operate but also facilitate greater integration into global supply chains. The current multi-layered duty structure often leads to delays and increased administrative efforts, which can impact manufacturing timelines and export competitiveness.

Specific recommendations from industry associations highlight several areas for immediate attention:

  • Rationalization of Duty Structure: A move towards fewer customs duty rates, similar to the GST regime's four-tier structure, to reduce classification disputes and compliance complexities.
  • Streamlined Documentation: Implementation of a more integrated, digital-first approach to documentation requirements, minimizing physical paperwork and multiple submissions.
  • Faster Clearances: Urging the adoption of advanced risk-based assessment systems and a "single window" clearance mechanism to significantly cut down the time taken for imports and exports.
  • Predictability and Transparency: Enhancing the clarity of customs valuations and rules of origin to provide businesses with greater certainty in their trade operations.
  • Automated Processes: Further investment in and utilization of automation for routine tasks, reducing human intervention and potential for delays.

These proposed reforms are viewed as critical for bolstering the 'Make in India' initiative by making it more attractive for domestic and international companies to manufacture within the country. Simplified customs procedures would lower the cost of raw materials and components, directly benefiting local production and enabling Indian goods to compete more effectively in international markets. Industry also believes that faster clearances would free up working capital for businesses, currently tied up in goods awaiting customs approval.

The Ministry of Finance is expected to engage in a series of consultations with various industry bodies, chambers of commerce, and export promotion councils in the coming months as part of its pre-budget exercise for 2026. These discussions will allow the government to assess the feasibility and potential impact of the proposed changes, balancing industry demands with revenue considerations and broader economic objectives. The outcome of these deliberations will shape the final customs duty and trade facilitation policies to be presented in the upcoming Union Budget.