Customs Duties in India: What You Need to Know About Taxes on Imports and Manufacturing

When you bring goods into India, customs duties, taxes imposed by the government on imported products. Also known as import tariffs, these fees are a major factor in how much it costs to bring raw materials, machinery, or finished goods into the country. For manufacturers in India, customs duties aren’t just a line item on a balance sheet—they shape whether it’s cheaper to buy locally or import from abroad. A 10% duty on steel imports might make local producers more competitive. A 25% duty on electronic components could push a company to shift its supply chain entirely.

Customs duties directly affect industries like electronics, furniture, textiles, and heavy machinery—exactly the sectors covered in our posts. For example, when IKEA entered India, they had to plan around high import taxes on finished furniture, which is why they now source more locally through partners like Indian furniture retailers, local companies that design and build home goods using domestic materials. Similarly, companies making smartphones or TVs rely on imported chips and screens, so even small changes in tariff rates, the percentage tax applied to specific categories of imported goods can ripple through production costs and retail prices.

India’s customs system isn’t just about blocking imports—it’s also a tool to boost local production. The Make in India initiative uses customs duties to encourage companies to build here instead of importing. A higher duty on imported wooden furniture, for instance, helps cities like Mirzapur, a major hub for hand-carved wood furniture in Uttar Pradesh thrive. Meanwhile, textile producers in Tamil Nadu, India’s top textile-producing state, known for knitwear and denim benefit from duties on imported fabrics, giving them space to grow.

But it’s not always about protection. Sometimes, low or zero duties on key inputs—like sodium hydroxide for soap making or steel for construction—help small manufacturers stay affordable. If you’re running a small-scale business, knowing which raw materials have high duties and which don’t can make the difference between profit and loss. And if you’re comparing prices between Chinese steel and U.S. steel, customs duties are one of the hidden reasons why one might be cheaper than the other, even before shipping.

What you’ll find in the posts below are real examples of how customs duties touch every corner of Indian manufacturing—from the cost of a single screw imported for a machine, to the pricing of a whole sofa made in Mirzapur. You’ll see how businesses adapt, where the real savings happen, and why some products are made locally while others still come from overseas. This isn’t theory. It’s what’s happening on factory floors and warehouse docks across India right now.