Tariff on most items to be in single digits in FY28 Budget: FM Sitharaman
Aug 6, 2026
The government aims to bring customs duty on most items to single-digit rates by the FY28 Budget while continuing tariff rationalisation and asset-focused borrowing
The government will continue its rationalising tariffs in the Budget for 2027-28 (FY28) and aims to lower the Customs duty on most items to a single-digit rate, Union Finance Minister Nirmala Sitharaman said on Thursday.
“Maybe by the Budget of 2027-28, I’d be able to say that, barring a few items, it (Customs duty) will come down to single digits,” Sitharaman said at the National Council of Applied Economic Research’s India Policy Forum in New Delhi. “Even now, barring 13 items, we have rationalised the rate,” Sitharaman said.
Customs duty rationalisation is the next on the government's agenda, following the rationalisation in corporate tax, income tax, and the Goods and Services Tax (GST) over the past six years.
The government has already made some progress in rationalising basic Customs duty rates after slashing the number of tariff slabs to eight, which also includes the ‘zero’ duty rate. Sitharaman removed seven tariff rates in the Budget for FY26. This was over and above the seven tariff rates removed in the FY24 Budget.
Following the rationalisation so far, India's average customs duty rate has fallen to 10.66 per cent from 11.65 per cent, according to government estimates.
Debt Discourse
Further, commenting on India's public debt, the finance minister said the government is making conscious efforts to raise debt only to create capital.
“You need to have debt. I don’t think any country can run on its own resources,” Sitharaman said. “Yet you will have to apply your mind on how much to borrow, when do you borrow, and for what pupose do you borrow.”
“When you borrow money, borrow it to create assets. Spending it for asset creation has its reward,” the minister said.
In the aftermath of the Covid-19 pandemic, the government has ramped up its own capital expenditure to induce a multiplier effect in the economy. The Centre has nearly tripled it capital spending in the last five years.
“I would think it’s the public expenditure that we kept doing all these years with a lot of tough confidence that the Indian economy will benefit from it, has actually helped the private sector to come forward,” Sitharaman said. “They are now taking risks and putting money so that they can benefit from the growth India is seeing.”
The minister recommended that state governments also adopt the same approach: to borrow funds for asset creation. “You have to be conscious in not making that borrowing a burden for generations to come,” she said.
“As much as you borrow, your own revenue will have to be ramped up each year so that the debt burden hanging on you could be progressively brought down,” the minister said.
The minister also said that some state governments have approached the Centre to help them restructure their debt and lower their interest burden. The finance ministry is working with such states, she said without mentioning their names.
According to the International Monetary Fund (IMF), India’s general government debt was 83.4 per cent in 2026.
[The Business Standard]
