Sitharaman Prepares Massive Customs Shake-Up: Faceless Assessments, Full Restructure Ahead

Finance Minister Nirmala Sitharaman announced a sweeping overhaul of India's customs framework on Saturday, calling it her "next big clean-up job" to streamline operations, boost transparency, and eliminate harassment through fully faceless assessments modelled on the income tax system. Speaking at the Hindustan Times Leadership Summit 2025, she highlighted persistent execution gaps in customs despite global alignment, drawing parallels to past "tax terrorism" that plagued income tax administration before reforms like simplified processes and technology-driven faceless scrutiny were introduced.

The reforms aim to make the entire customs assessment process faceless, removing human discretion to ensure consistent enforcement and reduce disputes. "It's not a secret I'm letting out before the budget," Sitharaman said, positioning the changes as a structural shift rather than a surprise announcement. A key focus is addressing the rising threat of illicit contraband through stronger risk-based checks, without creating friction for legitimate importers. Automation will drive decision-making, while high-duty slabs—described as needing to "come down"—will be rationalised to lower rates, simplify compliance, and enhance trade competitiveness. Customs duties have already seen steady reductions over the past two years.

The minister also signalled a comprehensive restructuring of the Customs Department to support these changes, though specifics on the revamp were not detailed. The overhaul responds to longstanding complaints from businesses about delays, corruption, and arbitrary valuations, which have eroded India's ease-of-doing-business ranking despite tariff cuts. By mirroring income tax's success—where faceless assessments slashed litigation and improved recovery—customs reforms could unlock billions in locked capital and accelerate imports of critical goods like electronics and machinery.

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Sitharaman emphasised that the initiative is well under preparation and not a "big bang" budget reveal, urging stakeholders to view it through the lens of economic fundamentals. "When we raised the rupee issue in opposition, circumstances were different—high inflation, a fragile economy. Now, look at our fundamentals," she added, linking the customs push to broader stability efforts.

As the February 2026 Union Budget approaches, these reforms could mark a pivotal step in easing trade barriers, potentially saving importers up to 20 per cent in compliance costs while bolstering revenue through better enforcement. Industry bodies like FICCI have welcomed the move, calling it "long overdue" for Atmanirbhar Bharat's global ambitions.

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