India’s revenue sacrifice on account of concessional tariffs under its free-trade agreements (FTA) is projected to rise sharply in the coming fiscal year, with official budget documents indicating that customs duty foregone could exceed Rs 1 trillion in 2026-27 (FY27), according to a report by Business Standard.

In FY26, the customs revenue given up under FTAs stood at Rs 98,569 crore, surpassing the budget estimate of Rs 94,172 crore for the year.

Among India’s trading partners, countries in the Association of Southeast Asian Nations are expected to account for the largest share of the revenue impact. Customs duty foregone on imports from Asean nations is estimated at Rs 40,833 crore in FY27, making it the most significant contributor among partner blocs.

The report said that India has flagged the need for an urgent review of the trade agreement with Asean, owing to the fact that imports from Asean nations have increased at a much faster pace than exports from India.

Although both sides had agreed in August 2023 to complete a review of the existing goods agreement by 2025, the deadline has been missed, with India expressing dissatisfaction over the slow pace of progress.

Other major contributors to customs revenue foregone under FTAs include Japan at Rs 11,365 crore, South Korea at Rs 10,872 crore, and Australia at Rs 5,107 crore in FY27.

Additionally, India’s trade agreement with the United Arab Emirates is expected to result in customs revenue forgone of Rs 9,267 crore in FY27, the report added.