Customs Tariff Rate Changes proposed in Budget 2025 by FM: What gets Cheaper? What gets more Expensive?

Thе Uniоn Вudget 2025 wаs presented by thе Finаnce Minister, Nirmаlа Sithаrаmаn, on February 1st, 2025, аt 11:00 а.m., befоre thе Pаrliаment. Thе Uniоn Вudget is thе аnnuаl finаnciаl stаtement thе Gоvernment of Indiа prеsеnts, outlining its estimаted revenue аnd expenditure fоr thе upcоming fiscаl yeаr аnd serving аs а roаdmаp fоr thе country’s еconomic prioritiеs.

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The Finance Minister, Nirmala Sitharaman, announces changes to customs tariff rates to promote domestic manufacturing, support critical sectors, and adjust the cost of various consumer goods. Let’s look at what is set to become more affordable and what will get more expensive:

Items becoming cheaper:

1. Life-Saving Medicines: To lower healthcare expenditures, the government has completely waived Basic Customs Duty (BCD) on 36 medications used to treat uncommon diseases and cancer. Additionally, 37 medications have been released from BCD, increasing access to necessary therapies.

• Minerals: The government removed customs taxes on the waste and scrap of 12 essential minerals, including copper, tungsten, cobalt, and antimony, to recognise their significance in various industries and ensure their availability for Indian production.

• Mobile Phone Components: The exempted capital goods list now includes 28 more items used in the manufacturing of mobile phone batteries in an effort to increase local production of mobile phones. Manufacturers like Apple and Xiaomi are anticipated to gain from this, which could result in more reasonably priced devices for customers.

• Shipbuilding Materials: The exemption on raw materials used in shipbuilding has been extended for an additional ten years to boost the shipbuilding sector and lower prices for domestic shipbuilders.

• Handicraft and Leather Goods: The government has introduced a scheme to promote handicraft exports, and wet blue leather has been fully exempted from BCD, benefiting artisans and small-scale manufacturers

Items becoming expensive:

1.  Interactive Flat Panel Displays (IFPDs): To rectify the inverted duty structure and promote local manufacturing, the BCD on IFPDs has been raised from 10% to 20%. As a result, imported interactive displays might become more expensive.

• Knitted Fabrics: A standard rate of 20% or ₹115 per kilogram, whichever is higher, has replaced the previous 10% or 20% BCD on certain knitted fabrics. Although this change aims to encourage domestic textile production, some imported materials may become more expensive.

• Non-Biodegradable Plastics: The union budget proposes a hike in custom duty on non-biodegradable plastics to 25%, intending to reduce plastic waste and encourage sustainable alternatives

• Telecom Equipment: The government has raised the BCD on select telecom equipment from 10% to 15% to strengthen India’s domestic production to achieve the Atmanirbhar Bharat (Self-Reliant India) initiative.
  

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