Life-saving drugs, luxury cars, and EV components get cheaper as new customs duties kick in

Patients battling cancer, rare diseases, and severe chronic conditions can now access cheaper imported life-saving drugs and medicines, while luxury car and motorcycle enthusiasts will also benefit from reduced prices, as customs duty cuts announced in the Union Budget 2025-26 by Finance Minister Nirmala Sitharaman came into effect today.

However, certain items, including interactive flat panel displays and specific knitted fabrics, have become costlier due to increased tariffs.

What’s got cheaper?

The budget, presented on February 1, brought relief for healthcare as 36 life-saving drugs and medicines were added to the list fully exempted from basic customs duty (BCD). Six medicines now attract a concessional duty of 5%.

The exemptions and reductions also extend to bulk drugs used in their manufacture.

Specified drugs under patient assistance programmes run by pharmaceutical companies, provided free to patients, have also been fully exempt, with 37 more medicines and 13 new programmes added to the list.

Imported premium cars and motor vehicles with a CIF (cost, insurance, and freight) value exceeding ₹40,000 (approximately ₹35 lakh), or engine capacities above 3,000 cc for petrol and 2,500 cc for diesel, now attract a reduced customs duty of 70%, down from 100%.

High-end motorcycles with engine capacities of 1,600 cc and above, imported as completely built units (CBU), will see tariffs drop to 30% from 50%, while those up to 1,600 cc in CBU form will now face 40% duty, reduced from 50%.

For bikes with engines of 1,600 cc and above, semi-knocked downimports now attract 20% duty (down from 25%) and completely knocked down imports 10% (down from 15%).

Other items benefiting from duty cuts include electronic toy parts (now 20% from 25%), synthetic flavouring essences (slashed to 20% from 100%), jewellery articles, and ethernet switches (down to 10% from 20%).

Cobalt powder and waste, scrap of lithium-ion batteries, lead, zinc, and 12 other critical minerals are now fully exempted from BCD.

As many as 35 capital goods for electric vehicle (EV) battery manufacturing and 28 capital goods for mobile battery production have been added to the fully exempted list.

Open cells used in LCD/LED TVs are fully exempt, while the BCD on other open cells has been reduced to 5%.

Shuttle-less looms, vital for the textile industry, are now fully exempt, and raw materials, components, consumables, and parts for ship manufacturing remain exempt for another decade.

In the leather and marine sectors, wet blue leather is fully exempt from BCD, while the export duty on crust leather (hides and skins) has been slashed from 20% to zero. For marine products, BCD on frozen fish paste (surimi) has dropped from 30% to 5%, and fish hydrolysate from 15% to 5%.

However, not all imported goods have become cheaper.

What’s got costlier?

The customs duty on certain knitted fabrics has been revised to 20% or ₹115 per kg, whichever is higher, pushing up costs. Similarly, interactive flat panel (touch screen) displays imported as fully built units now face a 20% duty, up from 10%, making them more expensive.

While cuts in duties on items like marbles, granite, and footwear were also introduced, the impact has been offset by an increase in the Agriculture Infrastructure and Development Cess (AIDC).