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Finance Minister Nirmala Sitharaman presented the Union Budget for 2025-26, focusing on key reforms to boost India’s economic growth, ensure inclusive development, and enhance household sentiment. The budget’s priority is to create an environment that accelerates growth, invigorates industries, and boosts spending power for India’s rising middle class. The Finance Minister outlined these goals, saying, “Union Budget 2025-26 with an effort to accelerate growth, secure inclusive development, invigorate society and industry, uplift household sentiment, and enhance spending on power of India’s rising middle class.”
Key Changes in Customs Duty
One of the highlights of the budget is a significant reduction in customs duties on several items, which will make life easier for consumers and industries alike. Several key products will now become cheaper, benefiting both consumers and businesses.
Items Becoming Cheaper
- Mobile Phones: 28 additional goods related to mobile phone battery production have been added to the list of exempted capital goods.
- Life-Saving Drugs: 36 life-saving medicines will now be fully exempted from Basic Customs Duty, easing the burden on healthcare.
- EV Batteries: To promote electric vehicle adoption, customs duties on electric vehicle batteries have been reduced.
- Critical Minerals: 12 critical minerals, including materials essential for various sectors, will now be cheaper.
- Medical Equipment: Key medical equipment will now be more affordable, contributing to better healthcare infrastructure.
- Marine Products: Customs duties on marine products will also be lowered, benefiting the fishing industry.
- Raw Materials for Ship Manufacturing: The exemption from Basic Customs Duty on raw materials for ship manufacturing will continue for the next 10 years.
Items Becoming Costlier
- Flat Panel Displays: The duty on flat-panel displays has increased, making electronics more expensive.
- Knitted Fabrics: Higher duties on knitted fabrics could raise the cost of certain clothing items.
Economic Outlook and Reforms
While the Union Budget 2025-26 lays the foundation for economic growth, it comes at a time when India’s GDP growth rate has slowed to a four-year low of 6.4%. The Economic Survey 2024-25, also presented by Sitharaman, projects India’s GDP growth in the range of 6.3-6.8% in FY26. While this is lower than expected, the survey stresses the need for significant deregulation and reforms in land and labor sectors to stimulate faster growth.
The Finance Minister’s proposals in the budget aim to address these concerns by implementing strategic tax reliefs, supporting industry sectors like manufacturing and healthcare, and focusing on sectors that will spur long-term sustainable growth.
The Union Budget 2025-26 seeks to balance immediate economic challenges with long-term growth objectives. The measures outlined in this budget—ranging from lower duties on essential items like medical equipment to support for electric vehicles—are designed to strengthen India’s economy and ensure inclusive development. While the country faces slower growth projections in the short term, these budget reforms represent a clear strategy to create a more robust and future-ready economy.
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