In a recent interview, Vivek Chaturvedi, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), expressed strong confidence in meeting the Budget targets for Customs duty receipts in the fiscal year 2027. He detailed a series of reform measures announced in the Budget aimed at enhancing efficiency through technology and simplifying processes.
Customs Reforms: A Dual Focus on Duty Exemptions and Process Simplification
Chaturvedi highlighted that the Finance Minister's Budget announcement placed a significant emphasis on Customs, targeting two primary areas. First, there is a substantial reduction in Customs duty exemptions on various goods. Second, the focus is on simplifying processes to address pain points that cause bottlenecks, thereby reducing cargo dwell time, easing congestion, and improving turnaround times for businesses. He noted that these measures are designed to complement each other, creating a more streamlined system.
Calibrated Approach to Duty Rates
On the topic of duty rates, Chaturvedi described the approach as carefully calibrated and nuanced, rather than a broad rationalization. Specific measures include eliminating Customs duties for setting up nuclear power plants to bolster energy security and providing exemptions for importing monazite, a critical rare earth used in manufacturing magnets for electric vehicles. These targeted exemptions aim to support strategic sectors and promote sustainable development.
Ease of Living Reforms
For ease of living, reforms have been introduced to baggage rules, which had not been amended since 2016, marking a significant update after a 10-year hiatus. These changes are expected to benefit international travelers and tourists by simplifying procedures and enhancing convenience.
Leveraging Technology for Faster Approvals
Chaturvedi emphasized the importance of technology in speeding up approvals. He stated that while India already has a strong IT backbone, the current system is dispersed. The goal is to create an integrated system within a two-year timeframe. Expression of interests have been issued, and vendors are expected to be appointed soon.
Integrated System for Better User Experience
The integrated application system aims to improve user experience, reduce turnaround times, and increase agility. For instance, risk assessments, which currently may take up to half an hour, are targeted to become instantaneous. Once the IT backbone is further strengthened, more agile services will be rolled out to stakeholders, enhancing overall efficiency.
Confidence in Budget Targets and GST Revenues
When asked about meeting Budget targets for Customs duty receipts in FY27, Chaturvedi affirmed confidence, stating that estimates have been conservative and targets will be met. Regarding GST revenues after rate rationalization, he pointed to recent collection figures that are comparable to those from January 2025, prior to the rationalization. He expressed optimism that with ongoing supply-side developments, revenues will gradually pick up, supported by economic resilience and GDP growth, leading to revenue buoyancy over time.
