Why in news?
India's Union Budget 2026, introduced several reforms to Basic Customs Duty (BCD) aimed at easing imports, boosting manufacturing, and supporting key sectors like health and energy.
Sector-Specific Exemptions
- Full exemption of BCD on 17 cancer-related drugs and medicines.
- Exemptions extended for nuclear power project imports till 2035.
- Duty-free imports allowed for capital goods used in lithium-ion battery and energy storage manufacturing.
- Exemptions on aircraft components, microwave oven parts, and seafood processing inputs.
About Basic Customs Duty (BCD)
Basic Customs Duty (BCD) is a tax levied on goods imported into India under Section 12 of the Customs Act, 1962, with rates specified in the Customs Tariff Act, 1975. It serves three main purposes: protecting domestic industries, regulating trade, and generating government revenue.
Key Facts
- A type of customs duty imposed on imported goods when they enter India.
- Legal Basis: Levied under Section 12 of the Customs Act, 1962 and determined by the First Schedule of the Customs Tariff Act, 1975.
- Applicability: Charged on nearly all imported goods unless specifically exempted.
- Calculation: Based on the assessable value of goods (CIF value – cost, insurance, freight).
- Purpose:
- Protect Indian manufacturers from cheap foreign imports.
- Regulate inflow of restricted/prohibited goods.
- Generate revenue for the government.
Types of Customs Duties in India
| Type of Duty |
Purpose |
| Basic Customs Duty (BCD) |
Standard tax on imports to protect domestic industry. |
| Countervailing Duty (CVD) |
To offset excise duty on similar domestic goods. |
| Anti-Dumping Duty |
To prevent dumping of goods at unfairly low prices. |
| Safeguard Duty |
Temporary protection against sudden import surges. |
| IGST on Imports |
Integrated GST applied on imports to align with GST framework. |
Risks & Considerations
- Frequent Policy Changes: Exemptions and rates are revised annually in the Union Budget.
- Sector-Specific Impact: Industries like pharma, electronics, and renewable energy often benefit from exemptions.
- Compliance Requirement: Importers must classify goods correctly under HS codes to avoid penalties.
- Trade Impact: High BCD can make imports costly, encouraging domestic production but raising consumer prices.
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