India has significantly reduced its average customs duty rate to 10.65% from 11.65%, which is at the same levels as prevalent in the Southeast Asian countries, Sanjay Kumar Agarwal, chairman, Central Board of Indirect Taxes & Customs (CBIC) said at a CII-event on Monday.
Agarwal noted the rate rationalisation exercise in the Budget was carried out with the objective of making the tariff structure simple, ensuring competitiveness of Indian industry and simplifying the tax regime, and added that the exercise was important for dispelling the narrative that India has one of the highest tariff structures in the world.
The government has rationalised basic customs duty rates, slashing the number of levies to just 8, but has kept the effective duty rates on most items the same by adjusting cess to further ease of doing business (EODB).
Finance Minister Nirmala Sitharaman removed seven tariff rates in the 2025-26 Budget. This is over and above the seven tariff rates removed in the 2023-24 budget. After this, there will be only eight remaining tariff rates, including a ‘zero’ rate to further EoDB.
Further, Agarwal said the thrust in the budget was to ensure adequate availability of the items which are critical for manufacturing in the country like critical minerals. These minerals, he said, are required for manufacturing areas like semiconductors, for transitioning to clean energy and for space programmes, he added.