As the Center prepares the Union Budget 2026-27, industry and tax experts have identified rising customs litigation, uneven trade facilitation and gaps in digitization as areas requiring immediate policy attention. In its pre-Budget memorandum, FICCI has outlined a series of indirect tax proposals aimed at reducing disputes, improving certainty and aligning customs administration with the government’s ease of doing business agenda.Tax professionals echo these concerns, warning that without structural reforms, litigation and compliance frictions could blunt India’s manufacturing and export ambitions.Reduce Litigation, Strengthen Customs Authorities (AAR) for Advance Ruling:A key demand of the industry relates to strengthening the Customs Authority for Advance Ruling (CAAR), which has emerged as an important tool for trade certainty after its reform in 2018. FICCI has pointed out that CAAR benches currently operate only from Delhi and Mumbai, while a major portion of imports and exports flow through southern and eastern ports such as Chennai, Hyderabad and Kolkata.The industry body has urged the government to set up additional CAAR offices in the south and east, arguing that wider regional reach would reduce litigation and compliance costs for businesses operating away from existing benches. FICCI has also sought a mechanism to extend the validity of advance rulings based on self-declaration, which is currently limited to three years, where there is no change in law or facts, to avoid repeated filings.Tax experts say that there is a need to increase the scope of advance rulings. Mahesh Jaisingh, partner, Deloitte India, said non-tariff measures often create uncertainty because their language does not conform to global naming standards. They have recommended empowering CAAR to rule on the applicability of specific non-tariff measures on a particular importer/exporter, after taking the written opinion of the concerned departmental authority, to begin with the agencies already integrated into the single-window customs platform. He also supported increasing the number of CAAR benches to improve speed and predictability.From a dispute-resolution perspective, Smita Singh, partner (indirect tax) at S&A Law Offices, has identified prolonged customs litigation as a major business risk. He has suggested a one-time settlement scheme under the Customs Act on the lines of the Sabka Vishwas scheme to unlock the revenue stuck in disputes and reduce legacy litigation.Provide AEO benefits to newly incorporated group companies:FICCI has also highlighted structural gaps in the Authorized Economic Operator (AEO) framework, particularly for newly incorporated entities within established corporate groups. Under current rules, applicants typically must demonstrate a three-year operational and financial track record. This is a criterion that newly formed subsidiaries or reorganized entities are unable to meet, even if their parent group is AEO-certified.The industry body has recommended that new companies within AEO-accredited groups should be allowed to apply for certification subject to standard scrutiny. It also suggested continuation of AEO status in merger situations, involving entities already enjoying AEO Tier-2 status, through a simple intimation instead of a fresh application.According to Deloitte’s Mahesh Jaisingh, the AEO program—now approaching its tenth year—needs a comprehensive reset. They have argued that delays and inconsistent interpretations have undermined the scheme’s core objective of trade facilitation.Suggestions include strict timelines for processing applications, provisional approval where delays are due to the department, and clear guidance on how previous litigation affects eligibility. He also called for extension of AEO benefits to exporters, including integration with mutual recognition agreements under free trade agreements.Facilitation measures for importers and exporters:On the operational front, FICCI has drawn attention to fragmented communication in the Customs administration. Currently, trade notices are issued independently by different customs commissionerates, forcing businesses to track down multiple websites or make physical visits to customs houses.To address this, FICCI has proposed a centralized, real-time digital repository of all trade notices accessible to importers and exporters across the country. The industry body believes that such a database will improve transparency, ensure uniform assessment practices at ports and reduce avoidable procedural frictions.Digitization of Customs Litigation Process:Despite extensive efforts by the government under the Digital India programme, customs decisions and litigation are still paper based. Businesses are still required to file physical replies with manual signatures for show cause notices, appeals and supporting documents.Mahesh Jaisingh of Deloitte has argued that this hybrid system dilutes the efficiency gains from virtual hearings already allowed under customs law. They have recommended enabling provisions in the Customs Act to allow filing of appeals, submissions and correspondence completely digitally, broadly in line with the GST framework, to reduce compliance burden and expedite dispute resolution.Activate Section 11(3) for true single-window compliance:Another recurring pain point for trade is the proliferation of non-tariff regulations issued by multiple ministries and regulators, often without a single, harmonized compliance interface. Section 11(3) of the Customs Act, inserted in 2018, was intended to address this, stating that import-export restrictions under other laws would apply only if notified under the Customs Act.Experts say that this provision is still under-utilized. Jaisingh has recommended issuing a comprehensive notification under Section 11(3) to fulfill all cross-regulatory obligations through a single customs-linked database. They argue that such a move would significantly reduce interpretive disputes for both trade and sector authorities and move India closer to a true single-window customs regime.Epilogue:Custom reforms should move beyond rate changes to focus on litigation management, certainty, and system-level convenience. With manufacturing, exports and supply-chain resilience at the center of India’s growth strategy, stakeholders argue that sharp indirect tax reforms could bring immense benefits to competitiveness and investor confidence.