From pharma to EVs: Major customs duty changes in Budget 2025 | Full list

The Union Budget 2025-26 has proposed several exemptions under Basic Customs Duty (BCD) to rationalise tariff structures, boost domestic manufacturing, and provide relief to consumers. Finance Minister Nirmala Sitharaman, in her Budget speech, announced sector-specific relaxations, including exemptions for life-saving drugs, critical minerals, lithium-ion battery components, and shipbuilding materials.

The government has fully exempted 36 additional life-saving drugs from BCD to provide relief to patients suffering from cancer, rare diseases, and chronic ailments. Six new medicines have been added to the list of those attracting a concessional 5% customs duty. Bulk drugs used in the manufacture of these medicines will also benefit from the exemption.

As many as 37 additional medicines under pharmaceutical companies’ Patient Assistance Programmes have been granted full exemption, along with 13 new patient assistance programmes.

The government has fully exempted BCD on cobalt powder and waste, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals to ensure the availability of key raw materials for domestic industries.

Two additional types of shuttle-less looms have been included in the list of fully exempted textile machinery to support the domestic production of technical textile products like agro-textiles, medical textiles, and geo-textiles.

As part of the government’s ‘Make in India’ initiative and efforts to correct the inverted duty structure, the BCD on interactive flat panel displays (IFPDs) has been increased from 10% to 20%, while it has been reduced to 5% on open cells and other components.

A total of 35 additional capital goods for electric vehicle (EV) battery manufacturing and 28 capital goods for mobile phone battery manufacturing have been added to the exemption list.

Recognising the long gestation period of shipbuilding, the BCD exemption on raw materials, components, consumables, and parts for ship manufacturing has been extended for another 10 years.

A similar exemption has been granted to the ship-breaking industry to make it more competitive.

The BCD on Carrier Grade Ethernet Switches has been reduced from 20% to 10%, aligning it with non-carrier grade switches.

The export period for handicraft goods has been extended from six months to one year, with an additional three-month extension if required. Nine more items have been added to the duty-free input list.

Wet blue leather has been fully exempted from BCD to boost domestic value addition and employment. Sitharaman also proposed to exempt crust leather from 20% export duty to facilitate exports by small tanners.

The BCD on frozen fish paste (Surimi) has been reduced from 30% to 5%, while the duty on fish hydrolysate for manufacturing fish and shrimp feed has been cut from 15% to 5%.