Finance Minister Nirmala Sitharaman announced a number of customs duty and trade related measures in the Union Budget 2026–27.
To promote exports of marine, leather and textile products, the FM proposed to increase the limit for duty-free imports of specified inputs used for processing seafoods for export from 1% to 3% of the FOB value of the previous year’s export turnover. She also proposed to extend the existing facility of duty-free imports of specified inputs, currently available for exports of leather or synthetic footwear, to exports of shoe uppers. Further, the time period for export of the final product will be extended from six months to one year for exporters of leather or textile garments, leather or synthetic footwear and other leather products.
Rare earth minerals remained a key area. FM proposed extending the basic customs duty (BCD) exemption available on capital goods used for manufacturing lithium-ion cells for batteries to those used for battery energy storage systems as well. She also announced a BCD exemption on the import of sodium antimonate for use in the manufacture of solar glass. The Budget proposed BCD exemption on the import of capital goods required for processing critical minerals in the country.
In the nuclear power sector, the FM proposed extending the existing BCD exemption on imports of goods required for nuclear power projects till 2035, while also expanding the benefit to all nuclear plants irrespective of capacity.
FM said the entire value of biogas will be excluded while calculating central excise duty payable on biogas-blended compressed natural gas (CNG).
In a move supporting alternative fuels, the government announced a full excise duty exemption on the biogas component of biogas-blended CNG, excluding its entire value from excise calculations. Earlier, only GST paid on biogas was adjusted, leaving a residual tax burden. With excise duty on CNG at around 14 per cent, or approximately Rs 14–15 per kg, this change could reduce retail CNG prices by a few rupees per kilogram.
Acknowledging the growing importance of electronics and chips in vehicles, the government unveiled India Semiconductor Mission (ISM) 2.0. The updated mission expands beyond chip manufacturing to include semiconductor equipment, materials, and intellectual property. It will support the development of domestically produced equipment and materials, full-stack Indian chip IP, and stronger semiconductor supply chains, all of which are critical for the automotive sector.
The Finance Minister also highlighted the strong response to the Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs 22,919 crore, which has already attracted investment commitments exceeding twice its target. As a result, the government has proposed increasing the scheme’s allocation to Rs 40,000 crore.
Auto and auto-component MSMEs are set to benefit from improved access to capital through a proposed Rs 10,000 crore SME Growth Fund, aimed at supporting capacity expansion, technology upgrades, and quality improvements.
Finally, to secure critical minerals for EV batteries, the government has announced plans to develop rare earth corridors. These corridors will span mining, processing, research, and manufacturing.