Union Budget 2026 – Customs & Foreign Trade Policy Update 2026 – Key Highlights
The Finance Bill, 2026 introduces strategic reforms in Customs law and Foreign Trade Policy to enhance trade facilitation, reduce compliance burden, improve export competitiveness, and strengthen India’s global trade positioning. These changes are aligned with the Government’s broader “Ease of Doing Business” and “Viksit Bharat” agenda.
PART A — CUSTOMS LAW AMENDMENTS (Finance Bill, 2026)
1. Extension of Customs Jurisdiction Beyond Territorial Waters
(Amendment to Section 1, Customs Act, 1962)
The scope of the Customs Act has been extended to include fishing and fishing-related activities beyond India’s territorial waters for Indian-flagged vessels.
Impact
- Expands Customs regulatory oversight
- Enables duty-free import of fish harvested in international waters
- Supports marine exports and seafood trade
2. Definition of “Indian-Flagged Fishing Vessel” Introduced
(Insertion of Clause 28A in Section 2)
A statutory definition has been inserted to ensure regulatory clarity over eligible vessels.
3. Penalty Paid Deemed as Charge for Non-Payment of Duty
(Amendment to Section 28(6))
Penalty paid under Section 28(5) shall now be treated as a charge equivalent to unpaid duty, strengthening revenue enforcement.
Impact
- Higher financial exposure in duty dispute cases
- Encourages voluntary and timely compliance
4. Extension of Validity of Advance Rulings to 5 Years
(Amendment to Section 28J)
Advance Rulings will now remain valid for 5 years instead of 3 years, subject to no change in law or facts.
Business Benefit:
- Greater certainty in classification, valuation, and origin rulings
- Reduced litigation and interpretational disputes
5. Duty-Free Treatment for Fish Harvested Beyond Indian Waters
(New Section 56A Inserted)
Fish harvested by Indian-flagged vessels beyond territorial waters:
- May be imported duty-free
- May be treated as export if landed at foreign ports
6. Simplification of Warehouse Transfer Procedures
(Substitution of Section 67)
Warehoused goods can now be transferred without prior approval of Customs officers, subject to prescribed conditions.
Impact:
- Faster logistics
- Reduced procedural delays
- Improved supply-chain efficiency
7. Deferred Payment of Import Duty — Monthly Option
Deferred Payment of Import Duty Rules, 2016
- Eligible importers may now pay duty monthly instead of every 15 days.
- Benefit of deferred duty payment also to be extended to ‘manufacturer importer’ till 31 March 2028.
Impact:
- Improved cash-flow management
- Reduced working capital burden
PART B — FOREIGN TRADE POLICY & EXPORT PROMOTION MEASURES
1. Extended Export Time for Duty-Free Input Schemes
Exporters in textile, footwear, and leather sectors now have 12 months instead of 6 months to complete exports under duty-free input schemes.
2. Expansion of Duty Exemption for Export Manufacturing
Duty exemption benefits extended to shoe-upper manufacturers and export-oriented production units.
3. Strengthening MSME Export Competitiveness
Government initiatives include:
- ₹10,000 Crore SME Growth Fund
- Expanded credit access
- Compliance support institutions
- Export competitiveness programs
4. SEZ Export Support — Domestic Sale Concession
Eligible SEZ manufacturing units allowed concessional domestic tariff area sales to address under-utilized capacity.
5. Customs Process Reforms Supporting Trade
Key trade-facilitation measures include:
- Unified Customs Digital Platform
- Longer validity of Advance Rulings
- Enhanced AEO benefits
- Simplified warehousing regime
Overall Business & Trade Impact
For Importers
- Lower compliance friction
- Faster warehouse movement
- Improved cash-flow flexibility
- Greater tariff clarity
For Exporters
- Extended export timelines
- Expanded duty-free input eligibility
- Improved SEZ flexibility
- Enhanced MSME trade support
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