Finance Minister Nirmala Sitharaman Signals Major Customs Overhaul Ahead Of Budget

Finance Minister Nirmala Sitharaman has indicated that a sweeping overhaul of India's customs framework is imminent, signalling one of the most significant reforms to the system in recent years.

Speaking at the Hindustan Times Leadership Summit, the Minister described customs as her “next big clean-up job,” emphasising the urgent need to simplify the regime, enhance transparency and make the entire process fully faceless.

Sitharaman noted that while India is broadly aligned with global customs standards, persistent issues in execution continue to hamper efficiency. She drew parallels with the earlier challenges in income tax administration, where complicated procedures had resulted in what she termed “tax terrorism.”

The government subsequently undertook a comprehensive reform—simplifying processes, improving technology and introducing faceless assessments. A similar model, she said, is now being prepared for customs.

A key concern driving the revamp is the rising risk of illicit contraband entering the country. The Minister called this a “serious problem” that requires stronger risk-based checks without adding friction for legitimate trade. By making the system fully faceless and automating decision-making, the government aims to eliminate discretion, reduce harassment and ensure consistent enforcement.

Sitharaman highlighted that customs duties have already been reduced steadily over the last two years. However, she acknowledged that some duty slabs remain high and “will have to come down” as part of a rationalised structure. Lower and simplified duty rates, she suggested, would reduce disputes, improve compliance and support trade competitiveness.

The Minister stressed that the overhaul is not a Budget-day surprise but a well-signalled structural reform. “It's not a secret I'm letting out before the Budget,” she remarked, underscoring that the groundwork is already underway. However, when asked whether the revamp would amount to a “big bang reform,” she deferred the characterisation to the media.