Budget 2025 has introduced a new direction for India’s economic policies. The government has made significant changes to customs duty across various sectors, affecting not only consumers but also creating new opportunities for investors and industries. From the pharmaceutical sector to electric vehicles (EVs), these changes aim to boost economic growth and provide relief to the public.
In this article, we will discuss in detail the key changes in customs duty in Budget 2025, their impact, and future prospects.
What’s Happening?
Union Finance Minister Nirmala Sitharaman presented Budget 2025 on February 1 and announced a reduction in customs duty on several items, including electronic products and certain cancer drugs. Additionally, the customs duty on gold and silver has been reduced to 6%, while for platinum, it is now 6.4%.
To boost domestic manufacturing and provide relief to consumers, several exemptions have been proposed under Basic Customs Duty (BCD). The finance minister announced special exemptions for life-saving drugs, critical minerals, lithium-ion battery components, and shipbuilding materials.
What’s Cheaper Now?
The reduction in customs duty on certain products is expected to bring down their prices. Some key items include:
Cancer and Critical Disease Drugs: 36 life-saving drugs have been fully exempted from basic customs duty, reducing treatment costs and providing relief to patients.
Shipbuilding: For the next 10 years, raw materials for ship manufacturing will be exempt from BCD, strengthening India’s shipbuilding industry.
Electronic Products: To promote LED/LCD TV manufacturing, customs duty on open cells has been reduced to 5%, and on input parts to 0%, lowering production costs.
Leather Industry Boost: Imports of wet blue and crust leather have been exempted from BCD. Additionally, a new scheme has been launched to support the leather and footwear sector, which is expected to generate 2.2 million jobs and Rs 4 lakh crore in revenue.
EV and Mobile Battery Manufacturing: 35 new items for EV battery manufacturing and 28 items for mobile battery manufacturing have been added to the capital goods exemption list.
Mineral Industry: Cobalt powder, lithium-ion scrap, lead, zinc, and 12 other minerals have been exempted from customs duty, boosting the green energy and electronics sectors.
Read More About- Union Budget 2025 Updates: All Key Announcements Explained
What’s More Expensive Now?
On the other hand, customs duty has been increased on some items, leading to potential price hikes:
Interactive Flat Displays: Customs duty on interactive flat panel displays has been increased from 10% to 20%, making large interactive screens more expensive.
Textiles: The import of knitted fabric has been a major challenge for India’s apparel industry. To address this issue, the government has fully included two categories of shuttle-less looms in the BCD exemption list. Additionally, the BCD rate on knitted fabric has been revised. Instead of ‘10% or 20%’, it will now be ‘20% or Rs 115 per kilogram, whichever is higher’.
What’s in It for Investors?
These changes in Budget 2025 will have a significant impact on investors. A reduction in customs duty in the EV sector is expected to boost investments in this segment. Lower lithium-ion battery costs will benefit EV manufacturers, increasing demand for stocks in this sector.
Additionally, reduced customs duty on raw materials in the pharmaceutical sector will improve the profitability of drug companies.
What’s Next?
According to the Economic Survey 2024-25, India’s growth rate for FY 2025-26 is projected to be between 6.3% and 6.8%. With declining food inflation and the fiscal deficit expected to be limited to 4.4%, the economy is likely to strengthen.
Budget 2025 has provided incentives for the EV and pharma sectors, while higher customs duty on interactive flat panel displays and knitted fabric may impact consumer expenses.
*This article is for informational purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
