NEW DELHI: Seeking to cushion key export sectors from the impact of steep US tariffs, finance minister Nirmala Sitharaman on Sunday announced a set of targeted customs and manufacturing measures in the Union Budget 2026, positioning them as a response to up to 50% duties imposed by US President Donald Trump on imports of Indian goods.Union finance minister Nirmala Sitharaman proposed reducing the tariff rate on all dutiable goods imported for personal use from 20% to 10%, a move seen as part of a broader effort to recalibrate India’s trade posture amid rising global risks.Follow live budget updates here

Relief for exporters hit by US duties

With industries such as textiles and seafood among those affected by the US tariff hit, the Budget introduced measures aimed at improving export competitiveness.In line with the government’s aim to promote exports and lift the seafood industry hit by US tariffs, Sitharaman proposed increasing the limit for duty-free imports of specified inputs used for processing seafood for export from 1% to 3% of the FOB value of the previous year’s export turnover.“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,” she said. The finance minister added that duty-free imports of specified inputs currently available for exports of leather or synthetic footwear would also be extended to exports of shoe uppers.“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,” Sitharaman said in her Budget speech.These labour-intensive sectors have faced huge challenges in the US, which is a major export destination, after Trump’s tariff decision.The country’s leather and leather products shipments dipped marginally 0.23% to $3.3 billion during April-December 2025-26.During April-December 2025, India’s seafood exports rose 15.53% to $6.5 billion, up from $5.67 billion in the same period last year.

Duty exemptions to push manufacturing

As part of a larger manufacturing push, Sitharaman announced a string of basic customs duty exemptions.In a boost to the defence sector, she said raw materials imported for the manufacture of aircraft parts used in maintenance, repair or overhaul (MRO) requirements by units in the defence sector would be exempted from basic customs duty.The Budget has provided for exempting customs duty on components and parts required for manufacturing civilian training and other aircraft. It also proposed duty exemption on raw materials imported for manufacturing aircraft parts used in maintenance, repair and overhaul by defence sector units.The finance minister proposed exempting BCD on specified parts used in the manufacture of microwave ovens.The finance minister also proposed a basic customs duty exemption to capital goods used for manufacturing lithium-ion cells for batteries and critical minerals, extending the duty exemption given to capital goods used for manufacturing lithium-ion cells to those used for manufacturing lithium-ion cells for battery energy storage systems as well.She also proposed exempting basic customs duty on the import of sodium antimonate for use in the manufacturing of solar glass, and providing a basic customs duty exemption to the import of capital goods required for the processing of critical minerals in India.In the nuclear power segment, Sitharaman proposed extending the basic customs duty exemption on import of goods required for nuclear power projects till 2035, expanding the benefit to “all nuclear plants irrespective of their capacity.”

Rare earth corridors for mineral-rich states

Sitharaman also proposed support for mineral-rich states such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors, as the government highlighted several initiatives linked to critical minerals.

Spending push while holding fiscal line

The Budget also marked a spending push aimed at countering global risks. Capital expenditure will be increased by 9% to Rs 12.2 trillion in the fiscal year beginning April 1, with focus areas including railways, small businesses and health.The fiscal deficit will be curbed to 4.3% of GDP in the coming year from an estimated 4.4% in the current year, while government debt is projected to come down to 55.6% from 56.1%, Sitharaman said.“Our first duty is to accelerate and sustain economic growth by enhancing productivity and competitiveness and building resilience to volatile global dynamics,” she said earlier.Sitharaman presented the Union Budget for a record ninth time.