FM Sitharaman says customs overhaul next after IT, GST reforms; rupee to ‘find its own level’

Finance Minister Nirmala Sitharaman on Saturday said the central government’s next major reform push will focus on simplifying and overhauling the customs tax system, following the rollout of significant changes in income tax and GST over the past few years.

Speaking at an event in New Delhi, the minister explained that the government had already moved income tax processes online and made them “faceless,” and that similar transparency and efficiency would now need to be introduced in customs. She warned that the smuggling of illegal goods remains a serious issue and said, "We have brought down custom duties in the last two years steadily. Customs is the next big assignment."

Sitharaman added that a complete restructuring of the customs system is being examined. She noted, "What's on the cards is a complete overhaul of customs needed," and emphasised the need for a simpler and more transparent system.

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Not a secret I'm letting out before budget: FM

She said this was not a Budget secret, remarking, "Not a secret I'm letting out before Budget," while stressing that India may be broadly aligned with global standards but faces issues in implementation. Reflecting on earlier tax reforms, she said, "Even in IT, it's the tax administration that causes problems, resulted in tax terrorism… So we worked on IT and simplified it, made it faceless."

She reiterated that illicit contraband remains a major concern and added that the attempt now is to make customs processes “faceless comprehensively.” She further said, "Will have to bring rates down where we are still high," calling customs her “next big clean-up job.”

On the broader economy, the finance minister said that India continues to face challenges rooted in external shocks. She pointed out that COVID-19 and a distant war had disrupted global supply chains, and added that India had also been compensating for governance inefficiencies. She said the election cycle had affected capital expenditure and noted that the economy had gone through a series of challenges, most of them originating outside the country. While acknowledging that the Indian economy is undergoing “many big-time changes,” she said the macroeconomic picture remains “quite hazy.”

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FM’s take on rupee decline

Addressing the rupee’s recent slide to an all-time low of 90 against the US dollar, Sitharaman said the currency should be assessed in the context of present economic fundamentals. She said, "Rupee will have to find its own level," calling exchange rates “too sensitive.” She recalled that when her party was in the Opposition, the state of the economy was “pathetic,” stressing that "Today fundamentals of the economy are sorted." She added that the ongoing currency debate must be viewed within today’s economic realities, saying it "needs to be circumscribed with today's realities."

The finance minister further said that India’s fundamentals place it in a “very different league” and that the currency debate should reflect that context. The rupee closed at 89.98 against the US dollar on Friday, weakening nearly 0.6 per cent over the week.

Meanwhile, the Reserve Bank of India has revised its GDP growth projection for 2025-26 to 7.3 per cent from 6.8 per cent, citing strong agricultural prospects, the continued impact of GST rate cuts, low inflation and healthy corporate and banking balance sheets. The central bank’s monetary policy committee has also cut its inflation forecast for the same period to 2 per cent from the earlier estimate of 2.6 per cent, driven by falling food prices and the effects of GST reductions.

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