Import Duty in India 2026: Rates, Changes & Business Impact

Last updated: September 2026

In India, the price of your smartphone is determined by import duty, how much profit an auto-parts manufacturer in Ludhiana makes, and whether a global carmaker assembles cars locally or ships finished cars in. It also determines the final price of every notebook, pen and art kit sold to retailers and online buyers by a stationery importer or wholesale stationery supplier. In just over three decades India has transformed itself from one of the world’s most closed tariff regimes to a simpler, lower-rate structure. There have been targeted hikes, safeguard duties, gold duty swings and new free trade pacts.

What Is Import Duty?

Import duty or customs duty is tax levied on goods entering India. Basic Customs Duty (BCD) is levied under the Customs Act, 1962 and the rates are prescribed under the Customs Tariff Act, 1975. A normal import bill comprises:

1.BCD: basic tariff, determined by HSN code.

2.Social Welfare Surcharge or AIDC: In Budget 2025-26 and onward, only one cess or surcharge per item is applicable.

3. IGST: generally available as credit of input tax.

4.Trade remedy duties: anti-dumping or safeguard duties on certain products.

On parts of ₹1,00,000 at 10% BCD, 10% SWS and 18% IGST, total to be paid is ₹30,980. Credit of ₹19,980 as IGST. So the effective cost is ₹11,000. A direct importer of a container of pens or office supplies from China uses the same calculation to work out landed cost.

How Import Duty Evolved

Pre-1991: India’s highest tariff was 355% in 1990-91, with a simple average of 113%. 1991 – mid 2010s: The crisis of the balance of payments led to the top rate falling to 50% in 1995-96 and to 20% in 2004-05. By the mid-2010s, the maximum rate on most non-agricultural goods was 10 per cent.

{source ; https://shorturl.at/Vwngm }

2018-2023: India raised duties on some finished goods like phones and solar equipment to boost local manufacturing, often alongside PLI schemes.

{source ; https://shorturl.at/yF4g2 }

2023-2026: Emphasis was placed on simplification. Budget 2025-26 had only 8 tariff slabs and the average customs duty was brought down to 10.66% from 11.65%. The Finance Minister said in August 2026 that most items should have duties in the single digits by the 2027-28 Budget.

{source ; https://shorturl.at/GUS5q }

Impact on Businesses and Consumers

Micro, small and medium-sized enterprises (MSMEs) benefit from reduced costs of inputs, fewer levels of levies and exemptions from export duties. According to the Budget 2026-27, duty exemption limits on inputs for seafood exporters have been raised from 1% to 3% of their turnover. The policy has also extended the period of exports for leather, textile and footwear products from six months to a year. But MSMEs still have some challenges in real terms.

The imposition of steel safeguard duties led to increase in the cost of manufacturing.

From 2016 to 2025, the number of Quality Control Orders grew from 70 to 790, which also increased the expense of certification from ₹15 lakh to ₹20 lakh for every product.

Many exporters indicate that they avail FTA concessions for only around 20% of the eligible exports.The rollback of QCOs of important raw materials in November 2025 has offered a relief to textile and plastics clusters. It’s a reminder that an imported stationery wholesaler has to verify whether any of the products in the range requires BIS certification before placing the orders with overseas factories.

{source ; https://tinyurl.com/mr2azb6n }

While large producers enjoy protection on their finished goods, they rely heavily on stability in policy. Fluctuations in rates midway through the year can create considerable risk for traders, particularly in commodities like edible oils and gold. The same can be said for any bulk suppliers in India on whom retailers depend, since any changes in m,id-year customs duties can affect the margin on already stored goods.

E-commerce sellers are also affected by this. A supplier who sells goods to e-commerce sellers including those who provide services in platforms such as Meesho, Amazon and Flipkart, must price the goods competitively, so decisions like an increase in tariff duties will directly affect prices at the shop fronts.

Consumers gained from Budget 2026–27, which exempted 17 cancer drugs from BCD and halved duty on personal-use imports to 10%.

Real Indian Case Studies

Mobile handsets: The combination of duty protection with PLI has resulted in a surge in iPhone exports from ₹9,351.6 crore in FY22 to ₹2 trillion in FY26, thereby making it India’s largest branded export. The duty on mobile phones has been reduced to 15% as the sector has matured.

Solar energy: The implementation of a 40% duty on solar modules from April 2022 raised the module price by around 30-40% and negatively impacted developers. However, going forward, the module manufacturing capacity of ALMM-listed companies increased from 8.2 GW in 2021 to 217 GW by August 2026.

{source ; https://tinyurl.com/tavfn4jj }

Edible oils: Duties grew by 20 percentage points in September 2024, leading to an increase in prices. In May 2025, the crude oil duty was lowered to 10%, increasing the crude-refined margin to 19.25%, thus benefitting local refiners.

{source ; https://tinyurl.com/4d5ybydk }

Gold: Duty was slashed to 6% in 2024, only to be raised back to around 15% in May 2026 as a means to protect foreign exchange reserves. According to the World Gold Council, increased duty means more smuggling. A reduction of the duty is said to be under consideration, but there is no announcement yet.

{source ; https://tinyurl.com/4c9ee9cd }

Regarding cars and electric vehicles, imports are charged up to 110% duty. In FY26, 3,537 units of locally assembled BMW EVs were sold as compared to only 342 fully imported Teslas being sold. 

{source ; https://tinyurl.com/yhvahzns }

Regarding steel, a safeguard duty of 12%, reducing to 11% by 2028, reduced the import of rolled steel by 38.7% in FY26. The MSMEs operating in the engineering sector feared that the drastic decrease would adversely affect their competitiveness. 

{source ; https://tinyurl.com/48zuykfh }

Free Trade Agreements

The India-UK CETA became effective on July 15, 2026. In terms of tariffs, India will reduce tariffs on 90% of its items while the United Kingdom will remove tariffs on 99% of Indian goods. The India-EU FTA, finalized in January 2026, is anticipated to be implemented by the end of 2026. It is important to note that companies need to have authentic proof of origin to take advantage of all the benefits. Importers who mostly import goods from China would be able to determine which FTA member countries offer lower tariffs on their imports as well.

{source ; https://tinyurl.com/38bs92v2 }

What to Expect Next

In Budget 2027–28, there may be single-digit duty goals and perhaps a decrease in gold duty, significance for the signing of the India-EU Free Trade Agreement, and the introduction of the Customs Integrated System in time for the next two years. In order to maintain level prices for retail and e-commerce consumers alike, it is important that paper goods importers and distributors successfully monitor these developments early.

FAQs

How much is the estimated rate of duty in India?

The rate is estimated by the Government at 10.66% but may differ according to HSN number.

Are MSMEs eligible for exemption from import duty?

Generally, YES. The exemption is achieved through the exports scheme, budget exemption, and the favorable FTA rates. Nevertheless, there is no full exemption for MSMEs.

What is an inverted duty structure?

An inverted duty structure refers to a situation whereby the duties on input products are higher than those on their end products thus making local production unattractive.

How does import duty influence an importer of stationery?

The duty is levied on the landed value based on the HSN code. Therefore, every importation of stationary products such as notebooks, pens and office supplies incurs BCD and IGST in addition to any other applicable taxes. A direct importer from China should check the relevant HSN rates on CBIC along with the applicable duties and BIS requirements before making an order.

        Conclusion

In today’s rapidly evolving trade landscape, India’s approach to import duties has evolved from one of protection by default to protection by design. It offers businesses — no matter their size — the chance to leverage these tariffs as a competitive edge through better awareness and proactive planning.

Whether you’re a big manufacturer or a small stationery importer, tracking notifications, understanding classifications, and utilising Free Trade Agreements (FTAs) along with existing export schemes is key.

However, this guide should be used only for general informational purposes, and you should always check current rates published by the Central Board of Indirect Taxes & Customs (CBIC). This will ensure you make informed choices when importing goods