Finance Minister Nirmala Sitharaman has declared a comprehensive overhaul of India's customs duty regime as the government's next major economic reform push. The plan aims to simplify procedures, increase transparency, and reduce the discretionary powers of officials, making compliance less cumbersome for businesses and individuals.
Blueprint for a Smoother Customs System
Speaking at the HT Leadership Summit 2025 in New Delhi, Sitharaman outlined the vision for this significant reform. She compared the proposed changes to the recent simplification of the Income Tax Act, which will be administered by a new statute starting April 2025. The minister stated that the goal is a "complete overhaul of the customs" to ensure it is not perceived as a tiresome and cumbersome process.
The reforms are designed to address long-standing grievances, much like the income tax reforms which sought to eliminate the "agonising" experience for taxpayers. Sitharaman highlighted the success of faceless assessments in reducing personal biases in tax administration. The customs overhaul will similarly focus on making rules more transparent and predictable.
Balancing Security with Ease of Doing Business
Sitharaman acknowledged the critical challenge of preventing illicit and contraband goods from entering the country. The reform process will need to carefully balance these security concerns with the imperative to minimise discretion at the level of customs officials. The minister indicated that the proposed changes would be comprehensive, tackling both procedural and tariff-related issues.
A key component will be customs duty rate rationalisation. While duties have been steadily lowered over the past two years, Sitharaman admitted that rates on some items remain above optimal levels. "In those few items where our rates are considered to be over the optimal level, we have to bring them down as well. Customs is my next big cleaning up assignment," she asserted.
Economic Context and Growth Outlook
The announcement comes against a backdrop of a resilient Indian economy, which grew at a robust 8.2% in the September quarter. This performance prompted Chief Economic Advisor V. Anantha Nageswaran to upgrade the full-year growth forecast to "the north of 7%", exceeding the 6.3-6.8% projection made in January's Economic Survey.
Sitharaman credited the government's strategy of heavy infrastructure investment, income tax relief, and continuous regulatory reform for sustaining growth amidst global challenges like the pandemic and supply chain disruptions. On consumption trends following recent tax cuts, she preferred a medium-term assessment over judging by one or two months of data.
The finance minister also addressed state finances, expressing the central government's willingness to help states restructure loans for better fiscal health. However, she cautioned strongly against borrowing to fund populist freebies, emphasising fiscal responsibility.
