HomeIndirect TaxesBudget 2026: FM Sitharaman Pushes Trust-Based Customs Regime to Cut Delays and...

Budget 2026: FM Sitharaman Pushes Trust-Based Customs Regime to Cut Delays and Boost Trade Efficiency

In a major move aimed at deepening trust-based governance and improving ease of doing business, Union Finance Minister Nirmala Sitharaman on Saturday announced a comprehensive set of customs reforms in her Union Budget 2026 speech. The proposals focus on expanding duty deferral benefits, strengthening the Authorised Economic Operator (AEO) framework, and reducing physical intervention in cargo clearance through technology-driven systems.

Extended Duty Deferral for Trusted Importers

As part of the trust-based approach, the Finance Minister proposed to enhance the duty deferral period for Tier 2 and Tier 3 AEOs from 15 days to 30 days. This extension is expected to ease cash flow pressures for compliant businesses and reduce their working capital requirements.

In another significant step, eligible manufacturer-importers will now be provided the same duty deferral facility, even if they are not yet classified as Tier 3 AEOs. The government expects this move to encourage such entities to gradually seek full Tier 3 AEO accreditation, thereby expanding the base of trusted traders.

Longer Validity for Advance Rulings

To bring greater certainty to trade operations and enable better long-term business planning, the Budget proposes to extend the validity period of advance rulings binding on Customs from three years to five years. This change is aimed at reducing disputes and repeated litigation on classification, valuation, and applicability of customs duties.

Whole-of-Government Use of AEO Accreditation

Reinforcing the “whole-of-the-government” approach, Sitharaman announced that government agencies will be encouraged to leverage AEO accreditation for providing preferential treatment in cargo clearance. This is expected to ensure uniform recognition of trusted entities across departments and reduce procedural overlap.

Reduced Verification for Trusted Supply Chains

The Budget also outlines reforms to minimize routine checks for importers with long-standing and trusted supply chains. Such importers will be recognized within the customs risk management system, reducing the need for repeated cargo verification.

For exporters, the government proposed end-to-end clearance of electronically sealed export cargo, allowing shipments to move directly from factory premises to ports without intermediate inspections, thereby cutting transit time and logistics costs.

Automatic Clearance for Low-Risk Imports

In a major automation push, Sitharaman said that imports involving goods with no compliance requirements will be cleared immediately upon arrival. For trusted importers, the filing of a bill of entry and the arrival of goods will automatically trigger customs clearance processes, eliminating manual intervention and enabling faster release of consignments.

Overhaul of Customs Warehousing Framework

The Finance Minister also announced a structural reform of the customs warehousing regime. The framework will be transformed into a warehouse operator-centric system, relying on self-declarations, electronic tracking, and risk-based audits.

This marks a shift away from the current officer-dependent approval system, which has often been cited as a cause of transaction delays. The new model is expected to significantly reduce compliance costs while improving transparency and accountability.

A Shift Towards Trust and Technology

Taken together, these measures signal a decisive shift by the government towards trust-based regulation, risk-driven enforcement, and technology-led customs administration. By rewarding compliance and minimizing human interface, the Budget 2026 proposals aim to make India’s trade ecosystem faster, more predictable, and globally competitive.

Read More: Budget 2026: FM Sitharaman Announces 14 Point Indirect Tax Reform Plan to Simplify Tariffs, Boost Exports 

Mariya Paliwala
Mariya Paliwalahttps://www.jurishour.in/
Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular