Finance Minister Signals Possible Customs Duty Cuts in Next Budget
Nirmala Sitharaman says tariff reforms will continue while highlighting responsible borrowing and sustained public investment to strengthen economic growth.
NEW DELHI: Finance Minister Nirmala Sitharaman has indicated that the Union Budget for 2027-28 could bring another round of customs duty reforms, with the government aiming to reduce most import tariffs to single digit levels. The announcement reinforces the Centre’s ongoing effort to simplify the indirect tax framework and improve the ease of doing business.
Speaking after delivering the C.D. Deshmukh Memorial Lecture organised by the National Council of Applied Economic Research (NCAER), Sitharaman said the government has already made significant progress in restructuring the customs duty regime. She noted that, except for a limited number of products, most tariff rates have already been streamlined.
According to the Finance Minister, the objective is to create a simpler and more predictable tariff structure that supports manufacturing, trade and investment. She expressed confidence that the remaining reforms could largely be completed in the next Union Budget, leaving only a handful of sensitive items outside the single-digit duty framework.
Over the past few budgets, the government has consistently focused on reducing the number of customs duty slabs and correcting the inverted duty structure. Such anomalies arise when finished products attract lower import duties than the raw materials or components used in their production, making domestic manufacturing less competitive.
Sitharaman also highlighted the government’s sustained capital expenditure programme launched after the Covid-19 pandemic, stating that higher public investment has strengthened private sector confidence and encouraged businesses to undertake fresh investments.
She observed that the Centre’s infrastructure spending has created a favourable environment for economic expansion by improving connectivity, generating employment and stimulating industrial activity. The increased public investment, she said, has acted as a catalyst for private capital formation across multiple sectors.
Addressing the issue of public finances, the Finance Minister stressed the importance of prudent borrowing by state governments. She said states should raise debt primarily for productive asset creation and ensure that repayment obligations remain manageable over the long term.
Sitharaman revealed that several state governments have approached the Finance Ministry to review their debt positions and explore restructuring options. Ministry officials have assisted interested states in reorganising their liabilities to improve fiscal sustainability.
She welcomed the growing awareness among states regarding responsible debt management, noting that borrowing should never become an unchecked financial burden passed on to future generations. Maintaining fiscal discipline, she said, is essential for ensuring stable economic growth.
Responding to a question on public debt, Sitharaman clarified that borrowing remains a necessary instrument for every economy, as governments cannot rely solely on internal resources to finance development. However, she emphasised that the scale and purpose of borrowing must always be carefully evaluated to preserve long-term financial stability.
The Finance Minister’s remarks underline the government’s twin priorities of continuing structural tax reforms while maintaining fiscal prudence, with the broader objective of supporting investment, competitiveness and sustainable economic growth.
