India, Feb. 5 -- Budget 2026-27 came at a critical moment for trade, just days after India concluded a free trade agreement with the European Union. It offered an opportunity to align customs policy with India's growing global trade ambitions. It takes a cautious approach - reducing costs for strategic manufacturing, clean energy, defence, health care, and exporters, while selectively raising tariffs to protect a few consumer goods. The result is a budget that delivers some focused benefits but leaves the deeper structural weaknesses of India's import tariff regime and customs system largely unaddressed. The most consequential customs changes in the budget lie in the removal of basic customs duties (BCD) on capital goods and strategic inputs. Nuclear power receives long-term certainty - much needed for a sector that has been recently opened for private investments. Duties have been eliminated on nuclear-generation equipment, absorber rods, and project imports for all nuclear plants registered with customs authorities through September 2035. For an industry defined by long gestation periods and regulatory risk, this clarity matters more than marginal rate cuts. Customs duties are removed on raw materials used for manufacturing and maintaining aircraft parts - including engines - when imported by defence public sector units. This strengthens India's aviation maintenance, repair, and operations (MRO) ecosystem and aligns with defence indigenisation goals without undermining domestic manufacturing. Duties are removed on sodium antimonate used in solar glass and on capital goods required for lithium-ion cell production for battery energy storage systems. In critical minerals, customs duty on monazite has been cut to zero. Electronics and health care see similar logic at work. Inputs for microwave ovens and video-game consoles are exempted to encourage deeper domestic value addition. In pharmaceuticals and medical devices, duties are cut to zero on 17 additional drugs, medicines for seven rare diseases, and key diagnostic components such as X-ray tubes and flat-panel detectors. The Budget will benefit exporters in aviation, nuclear energy, clean-energy equipment, electronics, and health care. Zero-duty treatment for aircraft components, nuclear equipment, lithium-ion manufacturing machinery, solar-glass inputs, and medical devices also directly benefits foreign suppliers. The proposed tax holiday until 2047 for foreign companies offering global cloud services from Indian data centres is another policy signal for attracting greater investments in this sector. Taken together, these moves signal a budget focused on cost competitiveness in capital-intensive and technology-led sectors rather than on broad consumer-facing liberalisation. Beyond tariffs, the budget improves export logistics and working-capital conditions. The duty-free import limit for inputs used in seafood processing is raised from 1% to 3% of export value. In footwear manufacturing, duty-free inputs now include shoe uppers, easing a long-standing bottleneck. Exporters of garments, leather apparel, and footwear now have 12 months - up from six - to meet export obligations under Advance Authorisation. This reduces compliance risk and working-capital stress in labour-intensive sectors. One of the most significant reforms is the removal of the Rs.10 lakh per consignment limit on courier exports. MSMEs, artisans, and e-commerce sellers can now ship higher-value goods without shifting to slower and more complex cargo procedures. For small exporters, this change is more consequential than many tariff cuts. But there are also selective protections that send mixed signals. The BCD on potassium hydroxide has been raised from nil to 7.5%, increasing costs for downstream users in chemicals, soaps, detergents, and batteries unless domestic supply expands quickly. Duties on finished umbrellas are raised to 20% or Rs.60 per piece, whichever is higher, to curb low-priced imports. But duties on umbrella parts and accessories are also raised sharply. This partly negates the protection offered to domestic manufacturers who rely on imported inputs. There are some clear misses. Despite strong signalling ahead of the budget about overhauling customs procedures, reforms remain incremental. Tariff simplification is largely limited to extending or pruning exemptions. Customs tariff changes are confined to a few items, leaving the overall regime unchanged. The maze of cesses, surcharges, and special levies layered over BCD remains untouched. Real simplification needs collapsing these into a small number of final duty bands that traders can actually understand. India's dense web of overlapping notifications - many not self-contained - further raises transaction costs. A unified, transparent, online tariff schedule is long overdue. The Export Promotion Mission announced in last year's budget has yet to start operations. Despite Cabinet approval, intended benefits are yet to reach exporters. High domestic input costs - steel, chemicals, logistics - continue to erode competitiveness. Practical reforms such as extending validity periods for claiming Remission of Duties and Taxes on Exported Products (RoDTEP) benefits, allowing aggregation of small credits, aligning duty drawback codes with eight-digit HS codes, and integrating customs IT systems remain absent. Deeper reform is, of course, inevitable. Customs duties account for barely 6% of India's gross tax revenue and average just 3.9% of import value. Nearly 90% of import value is concentrated in fewer than 10% of tariff lines, while most tariff lines generate negligible revenue. Maintaining a complex tariff schedule for such limited fiscal returns imposes heavy administrative and compliance costs. The budget takes sensible tactical steps, but it avoids the harder structural choices. In a world where geopolitics increasingly shapes trade, meaningful customs reform is no longer optional. It must be a continuous process, well beyond the annual budget ritual....