As Finance Minister Nirmala Sitharaman presented the Union Budget 2025, one of the focal points for many was the changes in Basic Customs Duty (BCD), which determine the prices of goods both for manufacturing and everyday consumption. This year, the government has tweaked BCD rates for several products to boost domestic manufacturing, aid export promotion, and provide relief to consumers. Here’s a breakdown of what’s getting cheaper and what’s becoming costlier:
To ease the financial burden on patients, especially those with chronic conditions, the government has announced significant changes to the import duties on lifesaving drugs. Finance Minister Sitharaman proposed adding 36 lifesaving medicines to the list of those fully exempted from BCD. Additionally, six more essential medicines will be subject to a concessional customs duty of 5%. The changes aim to make drugs more affordable for those suffering from serious health conditions such as cancer and rare diseases.
Furthermore, 37 more medicines, along with 13 new patient assistance programs, will be included in the exemption list, benefiting patients under various pharmaceutical company assistance schemes.
In a move to boost India’s manufacturing capabilities, especially in sectors that rely on imports, the government has proposed the full exemption of BCD on cobalt powder, lithium-ion battery scrap, and other critical minerals. This will help secure the supply of these materials for domestic industries, creating more job opportunities.
Additionally, to encourage the domestic production of technical textiles, Sitharaman announced the inclusion of two new types of shuttle-less looms in the list of fully exempted textile machinery. The BCD rate on knitted fabrics was also revised, making it more favorable for the domestic textile sector.
As part of the ‘Make in India’ initiative, the Finance Minister proposed raising BCD on Interactive Flat Panel Displays (IFPDs) from 10% to 20%, while reducing it to 5% for Open Cell and other components used in the manufacturing of LCD/LED TVs. The government also introduced exemptions for certain parts used in lithium-ion battery manufacturing, which is expected to benefit both the mobile phone and electric vehicle (EV) industries.
To support the shipping industry, which faces long development timelines, the government extended the exemption of BCD on raw materials and parts used for shipbuilding for another ten years. Similarly, for shipbreaking, the exemption was continued to boost competitiveness.
In telecommunications, the BCD on Carrier Grade Ethernet switches was reduced from 20% to 10%, aligning it with the lower rate for non-Carrier Grade switches. This move aims to resolve classification disputes and facilitate smoother imports for telecom infrastructure.
For domestic Maintenance, Repair, and Overhaul (MRO) sectors, Sitharaman extended the export timelines for foreign goods imported for repairs to one year, with an additional one-year extension if needed. This dispensation, which was previously applied to aircraft and ship MROs, was now extended to railway goods.
To enhance India’s export potential, the government made several proposals, including extending the time frame for handicraft exports from six months to one year, with a further three-month extension if required. Additionally, nine new items were added to the list of duty-free inputs for handicraft goods.
For the leather sector, the Budget proposes a full exemption on the BCD for Wet Blue leather, while Crust leather will be exempted from the 20% export duty, helping small tanners to export more efficiently. In the seafood sector, the BCD on Frozen Fish Paste (Surimi) was reduced from 30% to 5%, and a similar reduction was applied to fish hydrolysate, enhancing the competitiveness of Indian marine products in global markets.
Overall, the government has adjusted customs duties to encourage domestic production, enhance exports, and provide relief in critical sectors like healthcare and manufacturing. These changes will impact prices for a wide range of goods, making some items cheaper and others slightly costlier, while also aiming to boost India’s manufacturing prowess and export capabilities.
