Budget 2026–27: What Gets Duty-Free

The Union Budget 2026–27 has brought a long list of customs duty exemptions, cutting across healthcare, energy, electronics, exports, and heavy industry. Instead of one sweeping reform, the government has chosen targeted relief, focusing on areas where imports remain unavoidable or where exports are under pressure.

Presenting the Budget, Nirmala Sitharaman said the customs measures aim to support exports, deepen domestic manufacturing, and lower costs for consumers and patients.

Which Export Sectors Get Customs Duty Relief?

Several export-oriented sectors have received fresh support.

For seafood exporters, the limit for duty-free imports of specified inputs used in processing has been raised from 1% to 3% of the FOB value of the previous year’s exports.

In leather and footwear, the existing facility of duty-free imports of specified inputs has been extended to shoe uppers, in addition to leather and synthetic footwear. The exporters of leather garments, textile garments, footwear, and other leather products will get more time to export the final products, and the deadline will be extended to one year from six months.

The Budget also proposes the duty-free import of specific inputs that will be used to export the leather products, which will provide relief to the exporters who are under pressure due to the increase in US tariffs.

What Customs Duty Exemptions Have Been Announced For Manufacturing?

Manufacturing-related exemptions form a large part of the announcements.

The basic customs duty exemption on capital goods used to manufacture lithium-ion cells has now been extended to battery energy storage systems. The imports of sodium antimonate, which is used in the manufacturing of solar glass, will be exempted from customs duty.

The Budget proposes the exemption of basic customs duty on the specific parts used in the manufacturing of microwave ovens, which will promote the manufacturing of consumer electronics.

For aviation, customs duty will be exempted on components and parts used for manufacturing civilian training aircraft and other aircraft. In addition, raw materials imported for manufacturing aircraft parts used in maintenance, repair, and overhaul by defence sector units will also be duty-free.

What Relief Has Been Announced For Energy And Infrastructure?

The Budget proposes the extension of the basic customs duty exemption on the imports used in the nuclear power projects up to 2035.

In the clean energy space, the entire value of the biogas will be exempted while calculating the central excise duty on the biogas-blended compressed natural gas.

How Does The Budget Help Healthcare And Patients?

Healthcare is one of the most patient-focused areas this year.

The Budget removes basic customs duty on 17 cancer-related drugs and medicines, a move expected to reduce treatment costs for patients dependent on imported therapies.

In addition, seven more rare diseases have been brought under customs duty relief. Personal imports of drugs, medicines, and foods for special medical needs used in treating these diseases will now be exempt from import duties, benefiting patients who rely on specialised or named-patient treatments.

Are SEZ Units Also Getting Customs Relief?

Yes. In the Budget, the government has introduced a one-time measure to allow the SEZ manufacturing units to sell the goods in the domestic tariff area at the concessional rate of duty, which will help the SEZ manufacturing units to deal with the global disruptions in the market. This is aimed at helping SEZ units deal with global trade disruptions.

How Does This Build On Budget 2025–26 Customs Changes?

Many of the 2026–27 measures build on exemptions announced earlier.

In Budget 2025–26, the government exempted 35 capital goods for EV battery manufacturing and 28 for mobile phone battery production. It also removed customs duty on cobalt powder, lithium-ion battery waste, lead, zinc, and 12 critical minerals.

Other changes last year included duty relief for shipbuilding inputs, export duty removal on crust leather, full exemption on wet blue leather, revised duties on knitted fabrics, higher duty on interactive flat panel displays, lower duty on open cell components, and reduced duty on carrier-grade ethernet switches.

Taken together, the customs duty exemptions announced in Budget 2026–27 reflect a clear pattern. Relief is being used selectively, targeting exports under stress, industries dependent on imported inputs, and patients facing high treatment costs, while continuing the broader push for domestic manufacturing and value addition.

Sources

NDTV Profit

Business World

NDTV

MoF Press Release