βIndirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisoryβ
Dated: 01.02.2025
Key Budgetary Changes in Customs Tariff-Notfn No 05/2025-Customs dtd 01st February 2025
The Government of Indiaβs Notification No. 05/2025-Customs, issued on 1st February 2025, introduces amendments to Notification No. 50/2017-Customs, modifying import duty structures, adding new exemptions, and removing outdated provisions. Below are the key highlights:
1. New Exemptions on Select Goods
- Frozen Fish Paste (Surimi) for export manufacturing β 5% duty.
- Fish Hydrolysate for aquatic feed β 5% duty.
- Lifesaving drugs and medicines (List 4) β Duty exemption (Nil).
- Diagnostic kits and medical equipment (List 3) β Reduced to 5% duty.
- Wet Blue Leather (Hides & Skins) β Duty exemption (Nil).
- Lab-grown Diamond Seeds β Duty exemption (Nil).
- Gold, Silver, Platinum Findings (jewelry components) β 5% duty.
2. Import Duty Reductions on Key Sectors
- Renewable Energy:
- Duty exemption on wind turbine components, including gearbox, yaw components, controllers, carbon fiber, and balsa wood.
- Electronics & AI Industry:
- 5% duty on Open Cell Panel for Interactive Flat Panel Display (IFPD).
- Duty exemption on components used in IFPD manufacturing.
- Lithium-Ion Battery Waste:
- Full duty exemption for recycling purposes.
3. Automotive Industry Adjustments
- Revised import duties for motorcycles (Completely Knocked Down (CKD) kits & Fully Assembled Units):
| Engine Capacity | CKD (Non-pre-assembled) | CKD (Pre-assembled) | Fully Assembled |
| Up to 1600cc | 10% | 20% | 40% |
| Above 1600cc | 10% | 20% | 30% |
4. Revised Duty Structure for Textile Industry
- Duty exemption on high-speed Shuttleless Looms, including Rapier, Waterjet, and Airjet looms, and their components.
5. Sunset Clauses & Expiry of Certain Exemptions
- Some custom duty exemptions will expire by 31st March 2026, 2027, or 2029, including those on pharmaceuticals, electronics, and industrial goods.
- Key products losing exemption include medical equipment, raw materials, and components for older technologies.
6. Expansion of Pharmaceutical & Medical Exemptions
- New drugs added to List 3 & List 4 (including advanced cancer treatments, immunotherapies, and rare disease drugs).
- Exemptions for specific diagnostic kits and lifesaving medicines.
7. Compliance & Conditions
- Manufactured goods using duty-exempted imports must be exported within 12 months.
- Jurisdictional Commissioner may allow an extension of 3 months.
8. Effective Date
- This notification takes effect from 2nd February 2025.
Comparison between Notification 50/2017 vs. Notification 05/2025
| Aspect | Notification 50/2017 (Original) | Notification 05/2025 (Amended) |
| Gazette Publication Date | 30th June 2017 | 1st February 2025 |
| Purpose | Established customs duty exemptions and tariff rates for various goods. | Amends the 2017 notification with new exemptions, modifications, and deletions. |
| Scope of Exemptions | Covered a broad range of goods, including food, chemicals, electronics, and machinery. | Expands exemptions for certain industrial, agricultural, and healthcare goods. |
| New Additions | No direct additions, as it was the original notification. | New exemptions for Frozen Fish Paste (Surimi), Fish Hydrolysate, Lifesaving Drugs, Lab-grown Diamond Seeds, Gold/Silver/Platinum Findings, and Wet Blue Leather. |
| Deletions | Not applicable | Some earlier exemptions, such as for certain drugs and equipment, have been removed. |
| Reduction in Custom Duty | Standard duty rates applied across multiple products. | Reduction in customs duty on motorcycles, lithium-ion battery scrap, and electronic components. |
| Changes in Textile Industry | Standard customs duty on textile equipment and looms. | Duty-free imports for high-speed Shuttleless Looms (Rapier, Waterjet, Airjet) and components for the textile industry. |
| Electronics & AI Industry | No specific focus on AI components. | Customs exemption on components for Interactive Flat Panel Displays (IFPD) and AI-driven tech imports. |
| Renewable Energy Sector | Standard duties on components used in wind and solar energy. | Exemption on wind turbine components and reduction in customs duty for renewable energy infrastructure. |
| Customs Duty on Vehicles | Standard rates on motorcycles and vehicles. | Lowered duty on motorcycles (CKD kits) with different rates for engines below and above 1600cc. |
| Healthcare & Pharma Sector | Standardized exemptions for medicines and diagnostic kits. | Expanded list of exempted lifesaving drugs and diagnostic kits. |
| Agriculture & Food Industry | Covered duties on pulses, dairy, and cashew nuts. | Additional exemptions for fish-based products used in animal feed. |
| Customs Tariff Adjustments | Fixed rates for various goods. | Sunset clauses added for various exemptions, valid only until specific dates. |
Key Takeaways from the 2025 Amendments
- Broader exemptions in electronics, healthcare, and renewable energy.
- New product categories added for duty exemption, including fish-based exports, AI components, and lab-grown diamonds.
- Customs duty reduced for specific industrial sectors, particularly motorcycles, lithium-ion battery scrap, and wind energy components.
Removal of some old exemptions while adding expiry dates (sunset clauses) for several exemptions.
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Source: Cbic, Ministry of Finance, Govt of India
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