There is a continuity in India’s trade agenda over the last couple of years. India is renegotiating legacy regional trade agreements, negotiating new ones that are narrower but rule-intensive, and operating in a global trading system marked by sanctions risk, supply-chain securitisation, and episodic disruption. In that environment, export performance depends on whether domestic institutions can deliver predictable throughput, not merely low headline duties. India has gotten rid of QCOs. It has tried to address inverted customs duties. Needless to say, we were also nudged to do so by the tariffs imposed by the US.
Budget 2026 internalises the logic of making our exports more competitive across the board. Numerous process reforms have been introduced. Start with the Customs Act amendments. The extension of advance ruling validity from three to five years, with retrospective extension for existing rulings, is not a procedural tweak. It directly lowers regulatory uncertainty for exporters operating under complex tariff classifications and rules-of-origin regimes—precisely the domains where FTA disputes typically arise. This reduces policy risk as a fixed cost of exporting, increasing expected exporter survival.
Similarly, the substitution of section 67 to allow transfer of warehoused goods between bonded warehouses without prior officer permission represents a decisive shift from discretionary to rule-based logistics. For firms embedded in just-in-time supply chains, the variance of inventory movement is often more binding than average cost. Removing permission requirements collapses that variance.
The introduction of warehouse-operator-centric custody provisions under section 84, coupled with risk-based audit, further re-architects customs from an ex-ante control regime to an ex-post compliance regime. This aligns Indian practice with the implicit assumptions of modern FTAs, where facilitation commitments presuppose automated, non-discretionary border behaviour.
The courier reforms reinforce this shift. Removing the cap on the value of goods exported through courier channels, relaxing returns and rejects procedures, and permitting “return to origin” are all designed to decongest terminals and stabilise e-commerce exports. These measures matter because a growing share of India’s export growth is expected to come from small, design-led, digitally mediated exporters whose binding constraint is not price, but procedural friction.
Tariff-line rationalisation under the Customs Tariff Act serves a complementary function. The creation of 148 new tariff entries and the migration of effective rates from exemption notifications to the First Schedule is an institutional reform masquerading as a classification exercise. It reduces ambiguity, litigation risk, and compliance cost.
Notably, many new tariff lines are explicitly designed for export tracking and policy calibration (coated pipes, precursor chemicals, plant-based extracts). This is a data-infrastructure move. In a fragmented trading system, states increasingly need granular transaction data to defend against dumping, negotiate mutual recognition, and respond to partner-country investigations. Export competitiveness today includes the capacity to generate credible trade data.
The sectoral duty reductions reinforce the same logic. Zero-rating imports of critical minerals, renewable-energy inputs, nuclear equipment, electronics components, aircraft parts, and advanced pharmaceuticals is not about import liberalisation per se. It is about input-cost certainty and supply security in sectors where export viability depends on uninterrupted access to upstream goods that are often geopolitically sensitive.
Equally important is what the Budget does on the GST side. Extending provisional refunds to inverted duty structures, removing the ₹1,000 threshold for export-related refunds, and rationalising post-sale discount treatment directly target cash-flow risk for exporters. In dynamic export models, liquidity constraints amplify exit during demand or logistics shocks. The Budget reduces the probability of involuntary exporter exit by accelerating refunds and clarifying valuation rules.
The deletion of the IGST “intermediary services” place-of-supply provision is particularly consequential for services exports. The Budget resolves a long-standing distortion that effectively taxed cross-border intermediation services by reverting to the default destination-based principle.
Even the fisheries provisions (extending customs jurisdiction beyond territorial waters, defining Indian-flagged fishing vessels, and treating fish landed at foreign ports as exports) fit the same pattern. They formalise economic activity that previously sat in regulatory grey zones, allowing it to be integrated into export statistics, incentive schemes, and trade negotiations.
What unites these measures is institutional engineering. Budget 2026 treats policy uncertainty, classification ambiguity, discretionary permissions, refund delays, and data gaps as implicit export taxes. Removing them improves competitiveness without fiscal strain, retaliation risk, or the political-economy costs of explicit export subsidies.
This is also why the Budget aligns closely with India’s evolving FTA strategy. Modern trade agreements no longer reward tariff concessions in isolation. They reward the ability to implement facilitation commitments credibly.
Budget 2026 therefore does not assume a return to benign globalisation. It assumes continued disorder. Its export strategy is accordingly technical, legalistic, and institutional rather than promotional. In a trading system where reliability has become the scarcest input, that may be the most rational form of competitiveness available.
(Aditya Sinha (X:@adityasinha004) is OSD, Research at Economic Advisory Council to the Prime Minister. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)
