Countering US tariffs: India cuts personal import duty, exempts lithium-ion manufacturing

Counter to US tariffs: Centre reduces tariff rate on goods imported for personal use, exempts customs duty on manufacturing lithium-ion cells for batteries

In response to US tariffs on Indian goods, Union Finance Minister Nirmala Sitharaman on Sunday proposed several measures in the Union Budget 2026-27 aimed at promoting exports, supporting domestic manufacturing, and boosting strategic sectors like defence and green energy.

Addressing Parliament, Sitharaman announced a reduction in the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent, as part of efforts to ease costs for citizens and enhance trade competitiveness.

Focusing on the seafood sector hit by US tariffs, the Finance Minister proposed increasing the limit for duty-free imports of specified inputs used in processing seafood for export.

“I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current one per cent to three per cent of the FOB value of the previous year's export turnover. I also propose to allow duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear, to exports of shoe uppers as well,” she said.

In a boost to the defence sector, Sitharaman announced exemptions on basic customs duty for raw materials imported to manufacture aircraft parts used for maintenance, repair, or overhaul requirements by units in the defence sector.

The Finance Minister also proposed several measures to support energy and green technology projects. “I propose to extend the basic customs duty exemption on import of goods required for nuclear power projects till 2035 and expand it for all nuclear plants irrespective of their capacity,” she said.

She added, “I propose to extend the basic customs duty exemption given to capital goods used for manufacturing lithium-ion cells for batteries to those used for manufacturing lithium-ion cells for battery energy storage systems also. I propose to exempt the basic customs duty on the import of sodium antimonate for use in the manufacturing of solar glass. It is proposed to provide basic customs duty exemption to the import of capital goods required for the processing of critical minerals in India.”

The customs duty exemptions and export support measures follow the imposition of 50 per cent tariffs by the United States on Indian goods, which affected sectors including textiles, seafood, and other key exports.

Additionally, FM Sitharaman proposed support for mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated rare earth corridors, reinforcing India’s strategic push in critical minerals and renewable energy infrastructure.

Sitharaman presented the Union Budget 2026-27 for the record ninth consecutive time, continuing the government’s focus on growth, industrial competitiveness, and citizen-friendly reforms.