In a firm clarification amid ongoing global trade discussions, Union Finance Minister Nirmala Sitharaman stated that recent United States tariffs exerted “no influence” on the customs duty rationalization measures announced in the Union Budget 2026-27. The overhaul, she emphasized, has been an independent, multi-year exercise focused on simplifying India’s tariff structure, bolstering domestic manufacturing, enhancing export competitiveness, and addressing duty inversions.
Speaking to reporters in New Delhi on February 2, 2026, Sitharaman explained that the customs duty revisions had been in progress for the last two years, with no assessment made regarding the impact of US tariffs. The custom duty overhauling exercise has been going on for the last two years. The US matter has had ‘no influence’ on the budget,” she asserted, directly addressing speculation linking the proposals to external pressures.
The Union Budget 2026-27, presented on February 1, 2026, featured targeted reductions and exemptions in customs duty and central excise duty across strategic sectors. These changes aim to lower input costs, correct inverted duty structures, and support key industries vital for India’s growth trajectory toward Viksit Bharat.
Key sectors and products benefiting from the duty revisions include:
Marine products, leather, and textile sectors—with increased limits for duty-free imports of specified inputs (e.g., raising the cap for seafood processing from 1% to 3% of the previous year’s FOB export turnover), extended export realization periods from six months to one year, and exemptions on items like wet blue leather.
Energy sector — exemptions on capital goods for lithium-ion battery manufacturing, battery energy storage systems, solar glass inputs (such as sodium antimonate), and biogas-blended CNG excise adjustments.
Critical minerals processing — basic customs duty exemptions on capital goods required for domestic processing of critical minerals, plus duty relief on imports of rare-earth elements like monazite.
Aviation — exemptions on components and parts for manufacturing civilian, training, and other aircraft, as well as raw materials for aircraft parts used in maintenance, repair, and overhaul (MRO) by defense units.
Pharmaceuticals — duty concessions on 17 specific drugs and medicines, including those for critical illnesses like cancer.
These measures form part of a broader strategy to promote self-reliance, integrate Indian industries into global value chains, and mitigate external trade headwinds without direct retaliation.
On the disinvestment front, Sitharaman reaffirmed the government’s commitment, stating no change in stance and confirming that IDBI Bank’s strategic disinvestment will proceed soon. Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), revealed that the process has advanced to the third phase, with technical and financial bids now set to be invited. The Cabinet Committee on Economic Affairs granted in-principle approval back in May 2021, including the transfer of management control.
Shifting to the banking sector roadmap, Sitharaman highlighted the strengthened position of Indian banks—with robust balance sheets, high asset quality, and widespread inclusion. However, she stressed the need for forward-looking reforms. The budget announced a high-level committee on banking for Viksit Bharat to comprehensively review the sector, evaluate consolidation possibilities, enhance efficiency, and align it with India’s long-term growth ambitions while prioritizing financial stability, inclusion, and consumer protection.
“The high-level committee announced in the Union Budget 2026 will look into bank consolidation, and the terms of reference for the high-level committee will be drafted very soon,” Sitharaman said. She added that more details would emerge before the end of the current financial year.
This post-budget clarification from the finance minister underscores the government’s focus on domestic priorities and structural reforms, even as global trade dynamics evolve. The customs duty adjustments, disinvestment momentum, and banking sector review signal a proactive approach to building economic resilience and positioning India for sustained, high-quality growth in the coming years.
