Next big reform: FM announces overhaul of India’s customs system to boost transparency, efficiency

India's Finance and Corporate Affairs Minister, Nirmala Sitharaman, on December 6 said that a comprehensive overhaul of the country’s customs framework is her next major reform initiative. Speaking at the HT Leadership Summit, Sitharaman emphasized the urgency of simplifying customs procedures to ease the process for businesses and individuals alike.

“We need to make them a lot more simplified for people to feel that it is not too tiresome, cumbersome for them to comply with the expectations and rules,” said the minister, pointing to the ongoing push for reform in one of the country's most important trade interfaces.

Simplifying complex systems

India's customs authorities are responsible for managing the collection of tariffs and regulating cross-border movement of goods — including vehicles, hazardous materials, animals, and personal belongings. Recognizing the global importance of aligning with international standards, Sitharaman noted that India generally follows the World Customs Organisation (WCO) guidelines and keeps pace with evolving global benchmarks.

As part of the overhaul, Sitharaman revealed that the government has already reduced customs duties over the past two years. The finance minister confirmed that a review of the remaining items where tariffs remain above optimal levels is on the cards, with the intention of further lowering them.

“In those few items where we are still considered to be over the optimal rate, we will have to bring them down as well. So customs is my next big cleaning-up assignment,” she said, highlighting her government’s focus on reform.

Building trust through transparency

Drawing a parallel with past tax reforms, Sitharaman recalled how India’s income-tax regime had been marred by bureaucratic inefficiencies and the term "tax terrorism." However, reforms such as faceless assessments have since streamlined the system, making it cleaner and less intimidating for taxpayers. The finance minister stressed that a similar approach needs to be applied to the customs system.

She also underscored the need for a delicate balance in the reform process — simplifying procedures without compromising on security or facilitating the movement of illicit or contraband goods. One potential solution, she suggested, could be the introduction of advanced scanning technologies and reducing direct contact between customs officers and consignments, which would minimize discretion and enhance trust.

Sitharaman reaffirmed that customs reform is a priority in the broader economic reform pipeline. With global trade continuously evolving, India’s customs system must stay aligned with international best practices, ensuring smoother cross-border trade while safeguarding national interests.