The Union Budget has proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector.
In a major boost to aviation industry, Finance Minister Nirmala Sitharaman has announced customs duty exemptions. The exemptions will boost domestic manufacturing in the civil and defence aviation sectors. “The basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts to be exempted,” Sitharaman said.
The Union Budget has proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector.
Sitharaman also said the government expects the fiscal deficit to be at 4.3 per cent of the GDP in 2026-27, lower than 4.4 per cent projected for the current financial year. In her 2026-27 Budget speech, Sitharaman also said the government will provide Rs 1.4 lakh crore as tax devolution amount to the states in the next financial year while the net tax receipts is estimated at Rs 28.7 lakh crore.
The size of the Budget for 2026-27 is pegged at Rs 53.5 lakh crore. In 2026-27, the fiscal deficit is estimated at 4.3 per cent, the minister said as the government moves on the fiscal prudence path of debt consolidation.
The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal (April 2025 to March 2026 or FY26), is estimated at 4.4 per cent of GDP.
The finance minister, in her 2024-25 budget speech, had stated that from 2026-27 onwards, fiscal policy would endeavour to maintain the fiscal deficit in a way that the central government debt is on a declining path as a percentage of GDP.
The general government debt-to-GDP ratio was 85 per cent in 2024, which included central government debt of 57 per cent.
A fiscal deficit of 3-4 per cent is considered comfortable and a desirable target for a growing, developing economy like India, aiming to balance economic expansion with financial stability.
In the speech on Sunday, Sitharaman also said the new Income Tax Act, 2025, will be implemented from April 1, and the rules and tax return forms will be notified shortly.
