Budget 2026-27 Tariff Changes Likely to Boost India-US Trade: GTRI’s Ajay Srivastava
Budget 2026–27 customs duty changes improve market access for US firms while lowering input costs and boosting India’s export competitiveness.
The Gist
The Global Trade Research Initiative (GTRI) highlights that India's Union Budget 2026–27 is set to enhance export opportunities to the US while facilitating market access for American firms.
- Customs tariff changes align with US strengths in aerospace, nuclear technology, and clean energy.
- Zero customs duty on aircraft components and nuclear equipment benefits US suppliers significantly.
- Healthcare sector gains with duty exemptions on drugs and medical devices, improving US market access.
Post Budget, the Global Trade Research Initiative (GTRI) said the Union Budget 2026–27 is likely to improve India’s export prospects to the United States while simultaneously easing market access for US companies across several high-value sectors.
In a press statement, Ajay Srivastava, founder of GTRI, said the Budget’s customs tariff changes, though country-neutral on paper, “quietly align with US strengths in aerospace, nuclear technology, clean energy equipment, electronics and medical devices,” creating mutual trade benefits.
According to GTRI, the removal of customs duties on aircraft components and maintenance, repair and overhaul (MRO) inputs directly benefits US aerospace firms and engine manufacturers supplying India’s fast-growing civil and defence aviation market.
Zero duty on nuclear-generation equipment, absorber rods and project imports for all registered nuclear power plants until 2035 provides rare long-term certainty for US nuclear technology and equipment suppliers.
The Budget also lowers barriers for US exporters in clean energy and advanced manufacturing. Duty-free imports of capital goods for lithium-ion cell manufacturing and sodium antimonate used in solar glass reduce costs for US suppliers of clean-energy machinery and specialised inputs.
In health care, the exemption of customs duties on additional drugs, rare-disease medicines and key medical device components such as X-ray tubes and flat-panel detectors improves access for US pharmaceutical and med-tech exporters.
“Taken together, these changes support capital-intensive, technology-led US exports to India while strengthening India’s manufacturing ecosystem,” Srivastava said.
Beyond The US
GTRI said the Budget focuses on lowering import costs for strategic sectors such as nuclear power, defence, aviation, clean energy, electronics and health care, rather than headline-grabbing tariff cuts. Nuclear power projects receive long-term certainty with duty-free imports guaranteed until 2035, a move aimed at encouraging investment in large, long-gestation projects.
In defence and civil aviation, customs duties have been removed on raw materials used for manufacturing aircraft parts and for MRO of aircraft, engines and components when imported by public sector units under the Ministry of Defence. Clean-energy manufacturing gains from zero duty on inputs for battery energy storage systems and solar glass, while customs duty on the critical mineral monazite has been cut to nil.
Health care is another key beneficiary, with zero customs duty on 17 additional drugs and medicines, imports linked to seven rare diseases, and diagnostic components used in medical imaging equipment.
At the same time, the Budget selectively raises tariffs to protect certain domestic industries. The basic customs duty on umbrellas has been revised from a flat 20% to 20% or Rs 60 per piece, whichever is higher, while duties on umbrella parts and accessories have also been increased. Customs duty on potassium hydroxide has been raised to 7.5%, potentially increasing input costs for chemical and battery manufacturers.
On the export front, the Budget raises the duty-free import limit for seafood processing inputs and expands duty-free inputs for footwear manufacturing. Export timelines under the Advance Authorisation Scheme have been extended to ease working-capital pressure. The removal of the Rs 10 lakh per-consignment cap on courier exports is expected to open global markets for MSMEs, artisans and e-commerce sellers.
Overall, GTRI said the tariff changes aim to boost export competitiveness, support strategic manufacturing and deepen India’s integration with global supply chains.
