Union Budget 2026: Navigating changing global trade winds and tariff harvesting

Union Budget 2026 | The landscape of global trade and tariffs is undergoing rapid shifts, and India’s Union Budget 2026 arrives at a pivotal moment. Global trade wars and new trade facilitation agreements are redrawing market access, while domestic policies on taxes and trade barriers are being rethought.

This Budget is marked as one of the most forward-looking reform phases in India's trade and customs ecosystem. The measures announced reflect a decisive shift toward a trust-based, technology-enabled, and globally aligned customs framework, aimed at reducing operational friction, improving transparency, and strengthening India’s ambition to lead global trade.

The global business environment is increasingly defined by tariff tussles and strategic trade measures. Geopolitical tensions, from trade disputes to sanctions, have prompted many nations to pursue “friend-shoring” and bilateral deals in lieu of relying on a multilateral system that has seen WTO rules enforcement falter.

A central theme emerging from this Budget is the structural simplification of tariffs and duty administration. By integrating effective rates directly into the customs Tariff and rationalising long-standing exemptions, the Government is moving toward a cleaner, distortion-free tariff architecture. This ensures greater predictability for businesses, reduces reliance on exemption notifications, and brings India’s tariff regime closer to international best practices.

These measures signal a decisive shift from control-based regulation to facilitation-driven customs administration. For businesses, the outcome is clear: faster movement, lower costs, greater certainty, and a future-ready trade environment, positioning India strongly in the evolving landscape of global trade. Perhaps the most transformative element is the push for end-to-end digital and seamless movement of goods.

For years, India carried the reputation of a high-tariff market, even earning the moniker of “tariff king” by some critics. The changed global outlook pushed India to rethink and recalibrate on some of the steps that once indicated a strong push on governance rather than trade liberalisation. Recalibrating on non-tariff barriers came as one of the major shifts in policy. This step became necessary given the volatile tariff interplay done by trade partners and ongoing negotiations for trade deals.

While trimming domestic barriers, India has simultaneously been opening doors abroad through a slew of FTAs. In the last six years, the country has inked 8 trade pacts, and those which are operationalized are already bearing fruit for the economy. These FTAs are a cornerstone of India’s strategy to integrate with global markets and secure preferential access for its exports.

India’s momentum on global trade integration is highlighted by the recently concluded India–EU FTA, landmark agreements with the UK and EFTA bloc, and ongoing negotiations with the US, Canada, Chile and GCC nations, aligns seamlessly with Budget 2026’s modernised customs and trade facilitation reforms.

As India simplifies tariffs, digitises customs processes, and strengthens trust‑based compliance, these FTAs gain greater operational impact. Together, they position India to leverage smoother logistics, reduced duties, and predictable regulations, creating a future-ready, globally aligned trade ecosystem that enhances competitiveness and accelerates integration into world value chains

These measures proposed in this Budget signal that India is not just reforming the customs framework, it is reimagining the future of trade. A system once defined by paperwork, discretion, and delays is being reshaped into one built on digital trust, transparency and global alignment. For the industry, the message is clear: India is ready for the next chapter of world trade.

Trade policy is not only about tariff rates and treaties, but the nuts and bolts of customs administration also play an equally crucial role in shaping the trade ecosystem. Budget 2026 was expected to advance the ongoing customs modernization agenda, making processes faster, more transparent, and tech-enabled, and it delivered the same. The new Customs Integrated System further supports this by integrating currently fragmented processes into a unified, scalable digital backbone.

The Union Budget 2026 promised to be a defining moment in India’s trade and tariff trajectory. In many ways, it seeks to balance two imperatives: boosting domestic capabilities through lower input costs and simpler rules, and projecting India as a reliable node in the global trading system. By rationalising tariffs, recalibrating counterproductive trade barriers, leveraging free trade pacts, and upgrading customs administration, India is signalling that it is ready to compete on the world stage. These changes come as the global trade order itself is in flux, with new alliances, technology shifts, and the ever-lurking threat of trade wars shaping business decisions.

To summarise, Union Budget 2026 signals a landmark shift in India's customs and trade landscape, laying the foundation for a modern, technology-driven, globally competitive regime. The reforms go far beyond incremental administrative changes; they mark the emergence of a new era in trade facilitation, designed to support high-growth exports, seamless logistics, and a compliance framework rooted in trust rather than control.

(Himanshu Tewari is Partner and Leader, Trade, Customs & Product Regulatory, and Pranav Sachdeva is Director, Trade, Customs & Product Regulatory, with KPMG in India. Views are personal.)