Customs duty cuts a continuous process, not linked to today’s global situation: FM

Finance minister Nirmala Sitharaman on Thursday said that reduction in basic customs duty announced by the government in the recent past has been a continuous process aimed at improving self-reliance and for the country’s development, and not in response to the reciprocal tariffs that the US government said will impose.

Speaking in Rajya Sabha in response to the discussion on Finance Bill 2025, Sitharaman said that India’s tariff changes were meant for realising India’s aspirations in the manufacturing sector.

The minister said that the customs rate structure announced in the July 2024 budget was followed up in this year’s budget. The minister said that as a result of two tranches of rationalisation, the number of customs tariff rates has come down from 21 to eight.

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The minister also explained that the government has stated that only one—either the cess or a surcharge – will be applied on the same item. Social welfare surcharge is exempted on 82 tariff lines which are already subject to a cess.

Budget 2025 also proposed to add 35 additional capital goods used in production of electric vehicle batteries, and 28 additional capital goods important for production of mobile phone battery to the exempted goods list, the minister said.

The idea is to encourage production of EV batteries, mobile phones and mobile phone batteries in this country, the minister said.

Sitharaman also pointed out that the full basic customs duty exemption announced in this year’s budget to cobalt powder, the scrap of lithium ion battery, lead, zinc and 12 other critical minerals are in addition to the 25 critical minerals which were fully exempted from basic customs duty in the July 2024 budget.

Duty cuts to boost manufacturing, simplify structure

“Consistently, budget after budget, we are coming up with reduction in duties,” the minister said, adding that the intention of supporting advanced chemistry is to help meet India’s aspiration to build capacities for battery manufacturing and for being a manufacturing hub.

“This is a consistent thing,” Sitharaman said. The minister also said she heard “quite a few members” saying that India’s tariff reductions are in response to the tariff announcements made by President Trump.

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“No, we have been doing it from 2023,” Sitharaman said. The minister added that steadily, every year, newer items were given tariff reductions keeping in mind the goal of making the country self-reliant as well as to meet the requirements of becoming a developed nation while also simplifying the customs duty and the compliance details.

“This is an ongoing process. It has nothing to do with today’s global situation. But a process which will continue even in the future,” the minister said.

Govt committed to fiscal deficit target

The finance minister also told the House that the government has laid a fiscal consolidation path--both for the immediate term and the medium term. The minister said the government will achieve the fiscal deficit target. For FY26, the government has set a fiscal deficit target of 4.4% of GDP.

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