As the government prepares the Union Budget for 2026-27, industry leaders and tax professionals are raising urgent concerns. They point to growing customs litigation, uneven trade facilitation, and digital gaps as critical issues requiring immediate policy action. These challenges threaten to hinder India's manufacturing and export goals if left unaddressed.
Strengthening the Customs Authority for Advance Rulings
In its pre-Budget memorandum, the Federation of Indian Chambers of Commerce and Industry has proposed several indirect tax reforms. A major focus is on enhancing the Customs Authority for Advance Rulings. This body became a vital tool for trade certainty after its 2018 revamp.
FICCI notes that CAAR benches currently operate only from Delhi and Mumbai. However, significant import and export volumes flow through southern and eastern ports like Chennai, Hyderabad, and Kolkata. The industry body urges the government to establish additional CAAR offices in these regions. Wider regional access would cut litigation and compliance costs for businesses far from existing benches.
FICCI also seeks a mechanism to extend the validity of advance rulings beyond the current three-year limit. This extension would apply on a self-declaration basis when no changes occur in law or facts, avoiding repetitive filings.
Expert Calls for Broader Scope and Faster Resolution
Tax experts argue that the scope of advance rulings needs expansion. Mahesh Jaising, a Partner at Deloitte India, highlights that non-tariff measures often create uncertainty. Their language frequently misaligns with global nomenclature standards.
Jaising recommends empowering CAAR to rule on specific non-tariff measures for individual importers or exporters. This process should involve seeking written opinions from relevant departmental authorities, starting with agencies already integrated into the single-window customs platform. He also supports increasing the number of CAAR benches to improve speed and predictability.
From a dispute-resolution perspective, Smita Singh, Partner at S&A Law Offices, flags prolonged customs litigation as a major business risk. She suggests a one-time settlement scheme under the Customs Act, similar to the Sabka Vishwas scheme. This move could unlock revenue stuck in disputes and reduce legacy litigation.
Extending AEO Benefits to New Group Companies
FICCI highlights structural gaps in the Authorised Economic Operator framework. Current rules require applicants to demonstrate a three-year operational and financial track record. Newly formed subsidiaries or restructured entities within established corporate groups often cannot meet this criteria, even if their parent group holds AEO certification.
The industry body recommends allowing new companies within AEO-accredited groups to apply for certification, subject to standard checks. It also suggests continuity of AEO status in merger situations involving entities with AEO Tier-2 status. A simple intimation should suffice instead of a fresh application.
Mahesh Jaising notes that the AEO programme, now approaching its tenth year, needs a broader reset. Delays and inconsistent interpretations have diluted its core objective of trade facilitation. He proposes strict timelines for processing applications, provisional approvals for departmental delays, and clearer guidance on how past litigation affects eligibility. Expanding AEO benefits to exporters, including integration with mutual recognition agreements under free trade agreements, is also crucial.
Facilitation Measures for Importers and Exporters
On the operational front, FICCI draws attention to fragmented communication in customs administration. Trade notices currently issue independently from different customs commissionerates. Businesses must track multiple websites or make physical visits to customs houses.
To address this, FICCI proposes a centralized, real-time digital repository for all trade notices. This database would be accessible nationwide to importers and exporters. The industry body believes such a system would improve transparency, ensure uniform assessment practices across ports, and reduce avoidable procedural friction.
Digitalizing the Customs Litigation Process
Despite broader pushes under the Digital India programme, customs adjudication and litigation remain heavily paper-driven. Businesses still file physical replies to show cause notices, appeals, and supporting documents with manual signatures.
Mahesh Jaising argues that this hybrid system undermines efficiency gains from virtual hearings already permitted under customs law. He recommends enabling provisions in the Customs Act to allow fully digital filing of appeals, submissions, and correspondence. Aligning this with the GST framework would ease compliance burdens and speed up dispute resolution.
Operationalizing Section 11(3) for True Single-Window Compliance
Another recurring pain point for trade is the proliferation of non-tariff regulations from multiple ministries and regulators. These often lack a single, harmonized compliance interface. Section 11(3) of the Customs Act, inserted in 2018, aimed to address this by requiring that import-export restrictions under other laws become operational only when notified under the Customs Act.
Experts say this provision remains under-utilized. Jaising recommends issuing a comprehensive notification under Section 11(3) to route all cross-regulatory obligations through a single customs-linked database. Such a move would significantly reduce interpretational disputes for both trade and field officers, moving India closer to a genuine single-window customs regime.
Summing Up
Customs reform must move beyond rate tweaks to focus on litigation management, certainty, and system-level facilitation. With manufacturing, exports, and supply-chain resilience central to India's growth strategy, stakeholders argue that sharper indirect tax reforms could yield outsized gains in competitiveness and investor confidence.
