Customs Reforms and the Middle-Class Mandate: Why Budget 2026 Cannot Afford Half Measures

As India approaches Budget 2026, the expectations of its citizens—particularly the middle class that has consistently shouldered the fiscal burden—are not abstract. They are rooted in lived realities of trade delays, compliance disputes, and the persistent mismatch between policy rhetoric and execution. Customs reforms, often treated as a technical domain, are in fact deeply political. They determine how quickly goods move, how predictably businesses can plan, and how credibly the government can claim to be strengthening “Make in India.” For the common man who voted for stability and security, these reforms are not about jargon but about whether the government can deliver certainty in an uncertain global economy.  

The promise of a trust-based ecosystem in customs is critical. India’s trade facilitation has long been marred by disputes, retrospective demands, and procedural opacity. According to the World Bank’s Ease of Doing Business indicators, India improved its ranking in trading across borders from 146 in 2017 to 68 in 2020, but progress has plateaued since. Port dwell times remain higher than global benchmarks—averaging 3.5 days compared to Singapore’s 1 day. For exporters and importers, this lag translates into higher costs, reduced competitiveness, and ultimately weaker job creation. The middle class feels this indirectly: when businesses struggle with uncertainty, they pass costs onto consumers and restrain hiring. A trust-based ecosystem, therefore, is not a luxury but a necessity.  

The government’s proposal for a time-bound customs amnesty could be transformative if executed sincerely. Legacy disputes have clogged the system for decades, with litigation stretching across tribunals and courts. The Economic Survey 2025 noted that customs disputes worth over ₹1.2 lakh crore remain unresolved. Amnesty, if designed with clarity and fairness, could unclog this pipeline, free up capital, and restore confidence. But the danger lies in half-hearted measures. Past amnesty schemes in taxation often ended up as revenue-maximizing exercises rather than genuine dispute resolution. If Budget 2026 repeats that mistake, it will erode trust further. For the citizen who chose this government for security and predictability, the expectation is simple: resolve disputes, don’t recycle them.  

Digitisation is another pillar where rhetoric must meet reality. The Customs Authority for Advance Ruling (CAAR), MOOWR framework, and the Authorized Economic Operator (AEO) programme are all designed to reduce friction. Yet uptake remains limited. As of 2025, only 1,200 entities had secured AEO status, compared to over 15,000 in China. MOOWR, which allows manufacturing in bonded warehouses, has been underutilized due to procedural complexity. Digitisation must go beyond portals and dashboards—it must deliver risk-based clearances that actually reduce port dwell times. The middle class, though not directly involved in customs, experiences the consequences when imported goods—from electronics to medicines—face delays and higher costs. In an economy where inflation has averaged 5.8% over the past three years, efficiency in trade facilitation is not an elite concern but a household one.  

Tariff rationalisation is perhaps the most contentious but unavoidable reform. Duty inversions—where inputs are taxed higher than finished goods—have distorted manufacturing incentives. The auto sector, for instance, has repeatedly flagged that higher duties on components compared to assembled vehicles undermine domestic value addition. The Economic Survey highlighted that 27% of tariff lines suffer from some form of inversion. Rationalisation, coupled with a review of exemptions, could correct these anomalies. Entry-based exemptions, cushioning external tariff shocks, would provide predictability in a volatile global trade environment. For the citizen, this translates into more competitive domestic industries, better job prospects, and lower consumer prices.  

The debate, however, is not just technical. It is political. For ten years, governments have promised Make in India, but manufacturing’s share of GDP has stubbornly hovered around 15-16%, far below the 25% target. Employment elasticity in manufacturing has declined, meaning even when output grows, jobs do not. Customs reforms are the missing link. Without smoother clearances, rational tariffs, and dispute resolution, manufacturing cannot scale. And without manufacturing jobs, the middle class cannot expand. The voter who chose this government did so not for abstract GDP numbers but for tangible security—jobs, incomes, and predictability.  

Critics argue that customs reforms are too narrow to address India’s employment crisis. They point to the need for broader labour market reforms, skilling, and infrastructure. While true, this critique misses the point. Customs is the gateway to trade. If goods cannot move efficiently, if disputes drain capital, if tariffs distort incentives, then no amount of skilling or infrastructure will translate into jobs. Customs reforms are not sufficient, but they are necessary.  

The fiscal backdrop adds urgency. With a fiscal deficit target of 4.4% and combined central-state deficit hovering around 8-9%, the government has limited room for expansive spending. Customs reforms, by reducing disputes and enhancing efficiency, can unlock revenue without raising taxes. For the middle class, already burdened by direct taxation, this is the most credible path to relief. Raghuram Rajan’s warning at Davos—that without effective spending and human capital investment, fiscal deficits risk becoming a debt bomb—underscores the stakes. Customs reforms, by facilitating trade and boosting competitiveness, can generate the growth needed to stabilize fiscal accounts.  

The expectation from Budget 2026, therefore, is not incremental tinkering but decisive action. The citizen who voted for this government did so with the belief that it would provide security—economic, fiscal, and social. Customs reforms are a litmus test of that promise. If disputes are resolved, if digitisation delivers, if tariffs are rationalized, then Make in India can finally move from slogan to reality. If not, the middle class will continue to bear the costs of inefficiency, while promises remain unfulfilled.  

India stands at a crossroads. Global trade uncertainties, geopolitical tensions, and domestic inflation all demand resilience. Customs reforms are the lever that can provide that resilience. Budget 2026 must seize the moment. For the common man, this is not about technicalities—it is about whether the government he chose can deliver the security it promised. Half measures will not suffice. Continuity with acceleration is the expectation, but credibility will come only with results. The middle class has waited long enough; Budget 2026 must prove that its trust was not misplaced.