Union Budget 2026: Export as the 4th engine, eases customs for global supply chain integration

Finance Minister Nirmala Sitharaman's ninth budget is promising to integrate India into the global supply chain. It projects export as the 4th engine. Last year's budget reduced the number of basic customs duty slabs to eight by merging several rates. Many products were subjected to several lobbies such as cess, the social welfare surcharge (SWS), and the agriculture infrastructure and development cess (AIDC). This year's budget has only one cess or surcharge per item, the social welfare surcharge removed from 82 tariff lines.

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Import duty relief

Zero import duty on items such as critical minerals, lithium, cobalt, lead, zinc etc, specifically EV and mobile battery manufacturing goods, shipbuilding inputs, textile machinery, electronic componenets, input parts of PCBA, camera module, connectors and inputs or raw materials for use in manufacture of wired headset, microphone and receiver, USB cable, fingerprint reader/ sensor of cellular mobile phone, specified inputs/parts (chip on film, PCBA, glass board substrate cell) for use in manufacture of open cells of TV panels of LED/LCD TV, ground installation for satellites including its spares and consumables, goods used in the building of launch vehicles and launching of satellites, wet blue leather, shuttle less loom rapier looms and shuttle less loom Air jet Looms, 17 essential drugs or medicines. Significant import duty has been slashed in major items such as aquafarming and marine exports, chemicals for food and drinks, precious metals, some IT and electronic parts, motorcycle engines, etc. Other relaxations include extension of the time limit to duty-free inputs, from six months to one year, with a further three-month extension available if required. Additional inputs have been added to the duty-free list to support handicraft exporters.

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Supply chain integration

The Union Government is pushing a digital platform Bharat Trade Net for international trade, one platform for all, logistics, financing and compliance. A big push for export credit, cross-border factoring, and MSMEs to deal with no tariff barrier in the foreign market. There is targeted support for specific sectors that have potential for supply chain integration, such as IT, Electronics, and Textiles. There is also an export promotion mission to be jointly led by MSME, Commerce and Finance, aimed at improving access to credit, helping Indian MSMEs in navigating the international market. To further reduce uncertainty for traders, the Budget introduced a two-year time limit, extendable by one year, for finalising provisional customs assessments. These measures point towards a greater emphasis on easing compliance and making institutional credit and logistical support available to traders in the volatile international markets.