Roadmap for customs reform in the FTA era

Finance minister Nirmala Sitharaman recently said that customs reforms will be her major priority in next year’s budget.

- Prabhash Ranjan

This is excellent news for the economy.Customs reforms, some of which were initiated in the 2025 Budget, are indispensable for India to facilitate the ease of doing business and realise its full economic potential. Customs reforms could take many forms, such as simplifying tariff structures, easing procedural bottlenecks, streamlining processes, and augmenting physical, digital, and human infrastructure at ports to facilitate the smooth transit of goods. A key dimension of customs reforms is its intrinsic link to the signing of free trade agreements (FTAs). After a hiatus of a few years, India began signing FTAs from 2020 onward. In the last five years, India has inked numerous FTAs with prominent countries such as the UAE, Australia, and the UK. FTAs with other key countries/blocs, such as the EU, and a trade agreement with the US are in the works.

These FTAs not only obligate India to lower its customs duties but also offer a splendid opportunity for Indian manufacturers to augment their exports. Boosting the competitiveness of Indian goods requires the country to pursue domestic reforms, including in its customs structures, tenaciously. Imports are critical for exports.