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The Budget 2025-26 meets the expectations of fiscal consolidation, maintaining capital expenditure, and boosting consumption through tax cuts.
There are many sector-specific measures, tariff adjustments, and simplification of import processes.
The government has rationalised the tariff structure and addressed duty inversion issues on some items but the customs duty rates on primary goods like steel, basic chemicals that are used by downstream industries have remained the same.
The import duty rates on many items of drugs and pharmaceuticals, critical minerals, textile machinery, electronic components, lithium-ion batteries, inputs for shipbuilding, telecommunications have been brought down.
Still, the customs revenue is expected to go up from an estimated Rs 2.35 trillion to Rs 2.40 trillion next year, probably due to the weakening of the rupee.
The number of customs duty rates is being brought down to seven for industrial goods.
The Budget contains facilitation measures to help exporters of handicrafts, leather goods, and marine products.
There are proposals to amend the laws to prescribe a time limit for finalising provisional assessments, to give the powers of the Settlement Commission to an interim board, to give the importers more time for certain activities, to encourage voluntary compliance after customs clearance of imported goods and to treat the supply of goods warehoused in a special economic zone (SEZ) or a free trade warehousing zone to any person before clearance for exports or to the domestic tariff area neither as supply of goods nor as supply of services.
The exporters expected the finance minister to announce extension of the Rodtep (Remission of duties and taxes on export products) scheme beyond December 31, 2024, against physical exports of goods in the discharge of export-obligation against advance authorisations and exports by export oriented units (EOU) and units in SEZs.
That expectation has not been met. The hope of extension of the interest equalisation scheme beyond December 31, 2024, has also not materialised.
In her speech, the finance minister included ‘export promotion’ as one of the ten proposed development measures and listed ‘exports as one of the four powerful engines in the journey of development.
However, the allocation for duty drawback is being brought down from an estimated Rs 258.20 crore in the current financial year to Rs 181.90 crore in 2025-26.
Such a reduction in allocation (29.55 per cent) is quite surprising.
The allocation for the Market Access initiative scheme is being withdrawn completely from the estimated Rs 200 crore for the current year.
Similarly, the allocation under the Interest Equalisation Scheme is also being withdrawn fully from the estimated Rs 2,482 crore for the current year.
The allocation for the Rodtep scheme goes up by about 1.56 per cent.
The total allocation for export promotion is budgeted to go down by about 17.24 per cent.
The Budget contains sector-specific measures for agriculture, micro, small and medium enterprises and footwear, leather, toys, food processing and clean tech manufacturing industries.
For the shipbuilding industry, the Budget envisages a financial assistance policy, facilitations for shipbuilding clusters, and a maritime development fund of Rs 25,000 crore.
A notable announcement is the setting up of the Centre of Excellence in Artificial Intelligence for education with an outlay of Rs 500 crore.
Given the uncertain global trading environment, the government has mainly focused on boosting domestic consumption.
