Simplifying customs will be the next major reform, says the Finance Minister

Nirmala Sitharaman, Minister of Finance and Minister of Corporate Affairs | Photo credit: SRINATH M

During the current fiscal year, the government has introduced reforms such as rate rationalization and simplification of income tax and Goods and Services Tax (GST) in a bid to boost consumption by putting more cash in the hands of the common man.

“We need a complete overhaul of customs… we need to make customs simpler so that people feel that it is not cumbersome to comply… we need to make it more transparent,” Sitharaman said while speaking at the HT Leadership Summit here.

There is a need to bring the benefits of income tax to the customs side in terms of transparency, she said, adding that the proposed reforms will be comprehensive and will entail rationalization of customs duties.

The announcements in this regard could be made in the upcoming budget, which is likely to be presented on February 1.

“We have been steadily reducing customs duties over the past two years. But on those few items where our tariffs are considered above optimal levels, we also need to reduce them. Customs is my next big clean-up mission,” she said.

In this year’s Budget, among other measures announced, the government has proposed removing seven additional customs tariffs on industrial goods, following the abolition of seven tariffs in 2023-2024 (announced in the previous Budget speech on July 23, 2024). This reduces the total number of rate bands to eight, including a zero rate.

Sitharaman said the value of the rupee against the dollar will find its natural level.

The rupee has depreciated by about 5 percent against the US dollar in the calendar year 2025.

The rupee breached the 90 per dollar level for the first time and hit a new all-time low of 90.21 (provisional) on Wednesday, down 25 paise from the previous close, amid continued foreign fund outflows and higher crude oil prices.

Sitharaman exuded confidence that GDP growth would be 7 percent or more during the current fiscal year.

India’s economy grew by a higher-than-expected 8.2 percent – the highest level in six quarters – as increased factory output ahead of a consumption boost from the GST rate cut helped offset the slowdown in agricultural production.

Growth in the second quarter, compared with 7.8 percent in the previous three months and 5.6 percent in the year-ago period, was helped by strong results from the services sector, which posted double-digit growth.

For the first half ending in September, India recorded growth of 8 percent.

Published on December 6, 2025