3 weeks ago
India to complete customs tariff rationalisation by FY28: Sitharaman
A tariff is a tax a country charges on things brought in from other countries.
India charges different amounts of tax depending on the item, and these different amounts are called "slabs."
Right now India has about 13 slabs, which makes things complicated.
The Finance Minister, Nirmala Sitharaman, said India wants to make this simpler.
She hopes that by the 2027-28 budget, there will be fewer than 10 slabs.
That means taxes on imports will be easier to understand.
She also said some good things already happened, like making cancer medicines cheaper.
Some experts say there are still tricky parts, like special taxes on cloth.
The minister also talked about a bigger dream: making India a rich, developed country by 2047.
She said India was very rich long ago, and becoming rich again is like getting back something that was lost.
Finance Minister Nirmala Sitharaman said customs tariff rationalisation should be complete by the 2027-28 Budget, with the number of tariff slabs cut from about 13 to single digits.
India's simple average MFN tariff has fallen to around 15%, down from 17% in 2023, after reductions across nearly 12,400 tariff lines.
The FY27 Union Budget cut import duties on personal-use items from 20% to 10% and zero-rated basic customs duty on 17 critical cancer and rare disease medicines.
Experts caution that complexities remain, including volume-based duties on fabrics, mixed tariffs, the agriculture infrastructure cess, and unfinished removal of inverted duty conditions.
With the European Union FTA taking effect by year-end and a possible US pact, preferential imports may exceed 50% of India's total inward shipments within a year.
- Who
- Finance Minister Nirmala Sitharaman, speaking at the CD Deshmukh Memorial Lecture organised by the National Council of Applied Economic Research (NCAER).
- What
- Announced that customs tariff rationalisation will be completed by the 2027-28 Budget, reducing the number of tariff slabs from about 13 to single digits.
- Where
- India, at the CD Deshmukh Memorial Lecture organised by NCAER.
- When
- On Thursday; the rationalisation is targeted for completion by the 2027-28 Budget.
- Why
- To simplify the customs tariff structure, support trade after new free trade agreements, and advance India's goal of becoming a developed nation by 2047.
Government Position
Expert View
Customs rationalisation completeness
Government Position
The government says rationalisation is progressing well and will be complete by the 2027-28 Budget, with slabs falling to single digits.
Expert View
Experts say complexities persist, including volume-based duties on fabrics, mixed ad valorem-plus-specific tariffs, the agriculture infrastructure cess, and unfinished removal of inverted duty conditions.
FY27 Budget tariff measures
Government Position
The government says the FY27 Budget advanced rationalisation by cutting personal import duties from 20% to 10% and zero-rating basic customs duty on 17 cancer and rare disease medicines.
Expert View
Experts say the measures fell short of expectations, as they were pitching for a more comprehensive overhaul.
Key facts
- Current tariff slabs
- Around 13
- Target
- Fewer than 10 slabs by the 2027-28 Budget
- Simple average MFN tariff
- About 15% (down from 17% in 2023)
- FY27 personal import duty
- Cut from 20% to 10%
- Cancer and rare disease drugs
- Basic customs duty zero-rated on 17 medicines
- EU free trade pact
- Expected to take effect by year-end
- India's share of global GDP (PPP)
- About 8.5% today; roughly one-third at the beginning of the Common Era
- Context
- Stated at the CD Deshmukh Memorial Lecture organised by NCAER
Quotes
Finance Minister Nirmala Sitharaman
India’s Finance Minister
““At present, only around 13 (slabs) remain. Ultimately, the number of tariff slabs will come down to single digits. The work is continuing.””
financialexpress.com
““Perhaps by the 2027–28 Budget, I will be able to say that, except for a few items, the rationalisation is complete.””
financialexpress.com
Sources
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