Over Rs 1.52 Lakh Cr Locked in Customs Disputes: Possible Amnesty Scheme in FY27 Budget
In the upcoming Union Budget for 2026-27, the Indian government is considering the introduction of an amnesty scheme to address over Rs 1.52 lakh crore locked in customs duty litigations, according to Price Waterhouse & Co. This scheme aims to provide much-needed certainty to businesses grappling with lengthy disputes.
Current Customs Duty Landscape
– In the 2025-26 Union Budget, the government rationalized the customs duty structure, reducing the number of Basic Customs Duty (BCD) slabs to eight, including a zero per cent rate.
– Presently, 38,014 cases related to customs duties are tied up in litigation.
Proposed Changes for FY27
– The government is contemplating reducing the number of customs duty slabs further to five or six to streamline processes, as confirmed by Price Waterhouse & Co LLP Principal Gautam Khattar.
– This move is partly in response to concerns about the inverted duty structure stemming from various Free Trade Agreements (FTAs) India has signed with countries such as New Zealand, the UK, and Oman. Talks of additional agreements with the EU and the USA are also underway.
Addressing Duty Inversion
– With the existing FTAs, some finished goods are entering India at lower duties than the raw materials required for their production. Hence, there is a push to lower customs duties on raw materials to correct this imbalance.
– Khattar emphasized that it’s crucial to align raw material duty rates with those of finished products to support the domestic industry effectively.
Industry Expectations
– The industry has advocated for an amnesty scheme to provide clarity and resolve long-standing disputes.
– The goal is to settle historic cases, hence offering businesses a chance to reinvigorate operations without the burden of legal uncertainties.
Anticipated Trade Facilitation
– Alongside the potential amnesty scheme, stakeholders expect enhancements in customs processes, including faster customs clearances, to further facilitate trade and support business operations.
In conclusion, as the government prepares for the FY 2026-27 Budget, the prospects of an amnesty scheme and a re-evaluation of customs duties reflect a commitment to fostering a more efficient and secure environment for businesses in India. These adjustments could significantly impact the resolution of the current Rs 1.52 lakh crore customs duty disputes and support a more robust trade framework.