The Finance Minister has announced significant proposals in Union Budget 2026 aimed at boosting both domestic aviation manufacturing and defence sector capabilities. The budget includes comprehensive Basic Customs Duty (BCD) exemptions covering aircraft manufacturing components and defence sector repair materials.

Key Budget Proposals

The exemption framework encompasses two critical areas of the aviation sector:

Manufacturing Sector Benefits

The BCD exemption for manufacturing covers a comprehensive range of aircraft categories, specifically targeting components and parts required for:

• Civilian aircraft
• Training aircraft
• Other aircraft categories

Defence Sector Enhancement

The budget extends support to the defence sector through BCD exemption on raw materials specifically used for aircraft repair operations. This measure addresses the specialized requirements of defence aircraft maintenance and repair activities.

Strategic Impact

These dual exemptions represent a comprehensive approach to strengthening India's aviation ecosystem. By eliminating customs duties on both manufacturing components and defence repair materials, the measures could potentially reduce operational costs across the aviation value chain. The proposal aligns with efforts to enhance India's self-reliance in aviation manufacturing while supporting defence preparedness through cost-effective maintenance capabilities.

The Finance Minister has unveiled a significant proposal in Union Budget 2026 aimed at strengthening India's critical minerals processing capabilities. The announcement centers on providing Basic Customs Duty (BCD) exemption for capital goods used in the processing of critical minerals.

Key Budget Proposal

The proposed measure seeks to eliminate customs duties on capital goods specifically required for critical minerals processing operations. This exemption is expected to reduce operational costs for companies engaged in processing critical minerals, making domestic operations more competitive and cost-effective.

Strategic Impact on Critical Minerals Sector

The BCD exemption represents a targeted approach to boost India's self-reliance in critical minerals processing. By removing customs duties on essential capital equipment, the government aims to encourage investments in this strategic sector and enhance domestic processing capabilities.

This policy initiative aligns with India's broader strategy to reduce dependence on imports of processed critical minerals and build a robust domestic supply chain. The exemption on capital goods is expected to lower the initial investment burden for companies looking to establish or expand their critical minerals processing facilities in the country.