At the 23rd edition of the Hindustan Times Leadership Summit (HTLS) 2025, Union Finance Minister Nirmala Sitharaman outlined the government’s roadmap for economic reforms, highlighting that customs administration would be the next major focus of her ministry’s efforts. Speaking on Saturday in New Delhi, Sitharaman drew parallels between the transformations brought to India’s income tax system and the anticipated changes in customs, stressing the need for transparency, efficiency, and simplification.

From Income Tax to Customs: The Next Reform Frontier

Sitharaman recalled the challenges faced by taxpayers under India’s previous income tax regime, often criticized for its cumbersome processes and perceived arbitrariness. “We made sure income tax is no longer a tiresome exercise,” she said. “The commentary used to be that income tax rates are not the problem — ‘yes, we want lower and lower rates’ — but it is the tax administration which causes the problem.”

She noted that the system’s administration had historically caused difficulties for ordinary taxpayers and businesses alike, at times prompting the term “tax terrorism” to describe the experience of interacting with tax authorities. By implementing faceless assessments, online filing systems, and simplification measures, the government had reduced personal interface with tax officials, thereby increasing transparency and reducing the scope for harassment.

“This model of faceless, digital, and transparent administration is what we now plan to bring to customs,” Sitharaman said, underscoring that the customs system, though critical to trade facilitation, has often been cited as a bottleneck due to complex procedures and inefficiencies.

Tackling Smuggling and Enhancing Trade Facilitation

While the government has steadily reduced customs duties over the past two years, Sitharaman acknowledged that illegal trade and smuggling remain persistent challenges. “Smuggling of illegal goods is still a serious problem,” she said. The Finance Minister stressed that reforming customs is not merely a bureaucratic exercise but a necessary step to enhance trade efficiency, improve revenue collection, and prevent illicit practices.

The envisioned overhaul, she said, would focus on a combination of technological adoption, process simplification, and enforcement improvements. By leveraging digital platforms and automated systems, the government aims to make customs procedures faster, predictable, and transparent, benefiting both domestic businesses and international trade partners.

The Journey of Reforms: Sitharaman’s Policy Track Record

Sitharaman’s remarks at HTLS 2025 must be viewed in the context of her long-standing role in shaping India’s economic policy. An economist by training and an alumna of Jawaharlal Nehru University, she has held ministerial positions across multiple domains, contributing to structural reforms that have reshaped India’s trade, investment, and fiscal landscape.

Her tenure began as Minister of State (Independent Charge) for Commerce and Industry in 2014, where she championed initiatives to improve ease of doing business, promote foreign investment, and modernize trade regulations. In 2017, she became Union Minister of Defence, before assuming her current role as Finance and Corporate Affairs Minister following the 2019 general elections.

During her leadership in the Finance Ministry, she navigated India’s economy through turbulent periods, including the COVID-19 pandemic, implementing fiscal support measures, reforms in tax administration, and stimulus packages aimed at sustaining growth. She has also been at the forefront of efforts to modernize India’s financial infrastructure, strengthen compliance mechanisms, and enhance digital governance in revenue administration.

Strategic Goals for Customs Reform

At HTLS 2025, Sitharaman highlighted three main objectives for the planned customs overhaul:

1. Transparency: Reducing discretionary decision-making and introducing clear, standardized procedures for duty assessment, imports, and exports.
2. Efficiency: Leveraging digital platforms to minimize human intervention, shorten clearance times, and simplify documentation for traders.
3. Enforcement: Strengthening anti-smuggling operations and compliance monitoring to prevent illegal imports and protect domestic industries.

The Minister emphasised that reforms would aim not only to reduce red tape but also to foster confidence among businesses and investors. “Customs is the next big assignment,” she said, signaling that the government intends to bring the same level of structural improvement to customs as it did to income tax.

Economic Implications

An efficient and transparent customs system is crucial for India’s trade competitiveness. Simplified procedures and reduced processing times can lower the cost of doing business, increase export efficiency, and attract foreign investment. By addressing bottlenecks in the customs system, the government seeks to strengthen India’s position as a reliable trading partner globally.

Sitharaman also indicated that customs reform would complement broader economic objectives, including the government’s Make in India and export promotion initiatives. By reducing procedural delays and improving enforcement, the reforms could enhance domestic manufacturing competitiveness and improve the ease of importing inputs for industrial production.

Digital Governance and Technology Integration

Sitharaman’s emphasis on digitization mirrors her broader policy approach of integrating technology into governance. Drawing lessons from the faceless income tax system, she indicated that customs processes would increasingly move online, enabling real-time tracking, automated risk assessment, and data-driven enforcement.

This digital approach is expected to not only reduce human errors and opportunities for corruption but also provide greater predictability for traders and logistics operators. By creating a more reliable and standardized customs environment, the government aims to foster an ecosystem where compliance is easier and trade flows more smoothly.

Addressing Stakeholder Concerns

The Finance Minister also acknowledged that reforming customs will require balancing multiple interests, including those of businesses, enforcement agencies, and domestic industries. She stressed the need for dialogue, consultation, and iterative implementation to ensure that reforms are both effective and practical.

By involving stakeholders and incorporating technology-driven solutions, Sitharaman hopes to create a system that is responsive, fair, and aligned with India’s broader economic objectives. “We have to make sure that customs does not become a bottleneck but rather a facilitator of trade,” she said.

Conclusion

At HTLS 2025, Finance Minister Nirmala Sitharaman provided a clear roadmap for the next phase of economic reforms, highlighting customs as the “next big clean-up assignment” for her ministry. Drawing lessons from the successful transformation of India’s income tax administration, she emphasized transparency, efficiency, and enforcement as the pillars of the proposed overhaul.

Her remarks underscored the government’s commitment to improving trade facilitation, combating illegal trade, and creating an investor-friendly environment. By modernizing customs procedures and integrating digital solutions, the Finance Minister aims to strengthen India’s position in global trade while ensuring that the administrative experience for businesses is fair, predictable, and efficient.

Sitharaman’s focus on customs reform reflects her broader vision of economic governance: leveraging technology, simplifying processes, and creating systems that work for citizens, businesses, and the country as a whole. As India continues its trajectory as a major global economic player, efficient and transparent customs administration will play a critical role in sustaining growth, enhancing competitiveness, and boosting investor confidence.