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Importing Vehicles into India

Duties

The total Customs duty incidence on cars comes to around 181%. The car can only be imported, if you are transferring residence into India and the engine capacity is less than 1600 cc (for new cars), there is no cc limit for old and used cars, in your possession for more than 1 year. Scroll below to see more on valuation and duties.

Rules & Regulations for Importing Cars in India

India has huge market for imported luxury cars. There is great demand for new cars as well as second-hand cars. The Exim Policy 2001 lifted quantitative restrictions on the import of second-hand cars.

The import of vehicles shall be subject to the following guidelines of the Government of India:

1. (I) A new imported vehicle shall mean a vehicle that: -

  • (a) has not been manufactured/assembled in India; and
  • (b) has not been sold, leased or loaned prior to importation into India; or
  • (c) has not been registered for use in any country according to the laws of that country, prior to importation into India.

(II) The import of new vehicles shall be subject to the following conditions:

  • (a) The new vehicle shall-
    • (i) have a speedometer indicating the speed in km / h;
    • (ii) have right hand steering, and controls (applicable on vehicles other than two and three wheelers);
    • (iii) have photometry of the headlamps to suit "keep-left" traffic; and
    • (iv) be imported from the country of manufacture.
  • (b) In addition, the new vehicle shall conform to the provisions of the Motor Vehicles Act, 1988 and the rules made thereunder, as applicable, on the date of import.
  • (c) The import of new vehicles shall be permitted only through the Customs port at Nhava Sheva (Mumbai), Calcutta and Chennai.

2. (I) A second hand or used vehicle shall mean a vehicle that :-

  • (a) has been sold, leased or loaned prior to importation into India; or
  • (b) has been registered for use in any country according to the laws of that country, prior to importation into India;

(II). The import of second had or used vehicles shall be subject to the following conditions:-

  • (a) The second hand or used vehicle shall not be older than three years from the date of manufacture;
  • (b) The second hand or used vehicle shall:
    • (i) have right hand steering, and controls (applicable on vehicles other than two and three wheelers);
    • (ii) have a speedometer indicating the speed km / h; and
    • (iii) have photometry of the headlamps to suit "keep left" traffic.
  • (c) In addition, the second hand or used vehicle shall conform to the provisions of the Motor Vehicle Act, 1988 and the rules made thereunder, as applicable, on the date of import.
  • (d) Import of second hand vehicles shall be allowed only through the customs port at Mumbai.
  • (e) The second hand or used vehicles imported into India should have a minimum roadworthiness for a period of 5 years from the date of importation into India with assurance for providing service facilities within the country during the five year period. For this purpose, the importer shall, at the time of importation, submit a declaration indicating the period of roadworthiness in respect of every individual vehicle being imported, supported by a certificate issued by any of the testing agencies, which the Central Government may notify in this regard.
  • (f) The vehicle has to be submitted for testing to Vehicle Research and Development Establishment (VRDE), Ahmednagar, of the Ministry of Defence or the Automotive Research Association of India, Pune or the Central Farm and Machinery Training and Testing Institute, Budni, Madhya Pradesh, and such other agencies as may be specified by the Central Government, for granting a certificate by that agency as to the compliance of the provisions of the Motor Vehicles Act, 1988 and any rules made thereunder.

No import licence required for importing cars and other vehicles into India

  • 1. The importer should have been continuously stayed in abroad for a period of two years before coming to India for permanent settlement.
  • 2. The payment for the car is made abroad.
  • 3. The car should have been in use for atleast one year prior to importer's return to India.
  • 4. The car should be imported within six months of the arrival of importer in India.
  • 5. The custom duty should be paid in foreign exchange
  • 6. The importer is free to sell this car in the open market after his return to India without any restrictions about the period of retention of the vehicle.
  • 7. The importer can import another vehicle only after five years, if he moves out of India
  • 8. The duty on import by a handicapped persons can be paid in rupees and the vehicle in this case cannot be sold at any time without the permission of the government.
  • 9. Import of spares up to a value of Rs.20,000.00 for each imported vehicle is allowed with a license.
  • 10. The import duty is charged on the basis of list price prevailing. However, trade discount and depreciation on the value are deducted from the price list but freight from the country of manufacture and insurance charges are added.The landing charges are further added to arrive at the final assessable value.

Car Imports & Duties -  Exim policy 2001

Quantitative Restrictions on imports of second-hand automobiles lifted. The remaining QRs on about 715 items that were being maintained for balance of payment (BoP) purposes have been removed.

Exim policy stipulates that for new vehicles being imported into the country, the Vehicle should not be manufactured/ assembled in India, not been sold, leased or loaned prior to being imported to India; or should have been registered for use in any country prior to being imported to India. Vehicles should be imported only from the country of manufacture and should comply with CMVR, 1989.
Imports of new cars would be allowed only through Mumbai port (Nhava Sheva), Kolkata and Chennai.

Used vehicles being imported should not be more than three years old and conform to the Central Motor Vehicle Rules, (1989). Imported automobiles should have a minimum residual life of five years and the importer should ensure supply of spares and service during this period.

The government has decided to allow the entry of second hand vehicles into the country only through the Mumbai port. The commerce ministry has identified six categories of second hand vehicles having cylinder capacity of up to 3000 cc, which will now be allowed to be brought in through the Mumbai port. The six categories includes second hand or used motor cars and jeeps and landrovers.

Import of left hand vehicles banned. The vehicles should necessarily have right-hand steering controls, a speedometer indicating the speed in kilometres and a photometry of the head-lamps to suit 'keep-left' traffic.

For ensuring the requirements, pre-shipment as well as post-shipment of certification have been made mandatory.

The importing agency is expected, at the time of importation, to submit a certificate issued by a testing agency notified by the central government that the second hand vehicle being imported has been tested immediately before shipment and that the vehicle conforms to all the regulations specified in Motor Vehicles Act, 1988.

The importer is also required to submit a certificate issue by a testing agency notified by government that the used vehicle being imported conforms to the original homologation certificate issued at the time of manufacture.

The vehicle has to be submitted for testing to Vehicle Research and Development Establishment (VRDE), Ahmednagar, of the Ministry of Defence or the Automotive Research Association of India, Pune or the Central Farm and Machinery Training and Testing Institute, Budni, Madhya Pradesh, or other notified testing agency by the government.

The policy totally bans the import of cars whose engine capacity ranges from 1000 to 2500cc. As far as two-wheelers go, scooters with an engine capacity of over 50cc to 500cc can be imported. Motorcycle engine capacity should be their engine capacity should be over 250 cc but not in excess of 800 cc.

Valuation of Car and Duties

The value of the car is determined in the following manner:

  • i) Manufacturer's invoice value is accepted wherever such invoice is available.
  • ii) When no such invoice is available, value is determined on the basis of the world car catalogues available with the department or on the basis of manufacturer's price list, where ever available. Normal Trade Discounts are allowed to be deducted where ever the value is taken on the basis of World car catalogues.
  •  iii) Value of Second hand car is arrived at in the above manner after allowing the deductions for depreciation as per the schedule below, subject to maximum of 70% :

 

PERIOD OF USE DEPRECIATION ALLOWED
For every quarter during 1st year 4%
For every quarter during 2nd year 3%
For every quarter during 3rd year 2.5%
For every quarter during 4th year and thereafter 2%

The present rate of duty on import of Car is as below:


Total effective duty works out to 101.656% which includes the following.

BASIC CUSTOMS DUTY  35%
SPECIAL CUSTOMS DUTY  10%
ADDITIONAL DUTY  40% (16% CENVAT + 24% SPECIAL EXCISE DUTY*)
M.V.CESS  0.125%
SPECIAL ADDITIONAL DUTY OF CUSTOMS 4%

( * Special Excise Duty exempted in the case of cars capable of being used by physically handicapped persons )

India Car Import Policy

  • A. Persons Coming To India For Permanent Settlement.
  • B. Foreign Nationals Married To Indian Nationals.
  • C. Foreign Nationals Working In India.
  • D. Foreign Firms, Companies And Institutions Established In India.
  • E. Companies Incorporated In India Having Foreign Equity.
  • F. Journalists/Correspondents Of Foreign News Agencies.
  • G. Indian Firms Executing Contracts Abroad.
  • H. Charitable And Missionary Institutions.
  • I. Physically Handicapped Persons.
  • J. Honorary Consuls Of Foreign Government.

Import of automobile is not permitted except against a license or in accordance with a Public Notice issued in this behalf.

Import of Passenger cars and automobile vehicles may be made without a license by the categories of eligible importers specified in the Public Notice subject to the following conditions:-

  • i) The payment for the vehicle is made abroad.
  • ii) The payment of the Customs duty is made in foreign exchange, unless exempted in the case of any particular category of importer.
  • iii) The conditions specified against each category of eligible importers in the Public Notice are fulfilled.
  • iv) The importers returning to India on permanent settlement, a declaration to that effect is given to the Customs at the time of the clearance of the Car.

The categories of eligible Importers specified in the Public Notice are as follows:-

A. IndiaN NATIONALS OR FOREIGN NATIONALS OF IndiaN ORIGIN COMING TO India FOR PERMANENT SETTLEMENT:

  • (a) Import of One Passenger Car with engine size not exceeding four cylinders and not exceeding 1600 C.C. is permitted, whether the car is new or old. Alternatively, import of any one passenger car is permitted provided the car has been in the use of the importer for more than a year prior to the return to India.
  • (b) The importer has stayed abroad continuously for a period of at least two years prior to his coming to India for permanent settlement.
  • (c) The payment for the Car is made abroad before his return to India.
  • (d) The car should be imported into India within six months of the arrival of the importer in India for Permanent settlement.
  • (e) If the importer transfers his residence out of India again, he will be entitled to import another car under this Policy only after a minimum period of five years from the date of importation of the previous vehicle.
  • (f) The importer is free to sell the car in the open market after his return to India without any restriction as regards the period of retention of the vehicle.
  • (g) Import of any other type of automobile vehicle may be permitted by the Director General of Foreign Trade on merits.

B. FOREIGN NATIONALS (INCLUDING PERSONS OF IndiaN ORIGIN) MARRIED TO IndiaN NATIONALS.

  • (a) Import of one passenger car is permitted, whether the car is new or old.
  • (b) The importer, namely the foreign national including person of Indian Origin, is coming to India for Permanent settlement.
  • (c) The car has been gifted to the importer by the parents within one year of the marriage.
  • (d) The importer is free to sell the car in the open market after his or her return to India without any restriction as regards the period of retention of the vehicle.

C. FOREIGN NATIONALS WORKING IN India.

  • (a) The contract period for the employment, assignment or stay of the importer in India shall not be less than one year.
  • (b) Import of one vehicle is permitted.
  • (c) In case the importer wants to dispose of the vehicle, it will be subject to the condition of re-export of the vehicle or sale to the state Trading Corporation of India or to an eligible importer covered by any of the categories C, D, E and F mentioned in this Public Notice.
  • (d) Subsequent import of a vehicle may be made after the disposal of the previous vehicle accordance with the condition mentioned in (c) above, provided there is a minimum period of five years between two successive imports.

D. BRANCHES/OFFICES OF FOREIGN FIRMS, COMPANIES AND INSTITUTIONS (CORPORATE OR OTHERWISE) ESTABLISHED IN India.

  • (a) Branches/Offices foreign firms, companies and institutions (corporate or otherwise) established in India may import up to three vehicles.
  • (b) In case the importer wants to dispose of the vehicles, it will be subject to the condition of re-export of the vehicle or sale to the State Trading Corporation of India or to an eligible importer covered by any one of the categories C, D, E and F mentioned in this Public Notice.
  • E. COMPANIES INCORPORATED IN India HAVING FOREIGN EQUITY PARTICIPATION AMOUNTING TO NOT LESS THAN US $ 2 Lakhs.

    • (a) The Indian company may import upto three vehicles.
    • (b) The payment for the vehicle as well as the payment of the Customs duty in foreign exchange are made by the foreign company holding equity in the Indian company.
    • (c) In case the Indian company wants to dispose of the vehicle, it will be subject to the condition of re-export of the vehicle or sale to the State Trading Corporation of India or to an eligible imports covered by any one of the categories C, D, E and F mentioned in this Public Notice.
    • (d) Subsequent import of a vehicle may be made after the disposal of the previous vehicle in accordance with the condition mentioned in (c) above, provided there is a minimum period of five years between two successive imports of a vehicle.

    F. ACCREDITED JOURNALISTS/CORRESPONDENTS OF FOREIGN NEWS AGENCIES :

    • (a) The importer should have the Accreditation Certificate from the Press information Bureau, Ministry of Information 7 Broadcasting, Government of India.
    • (b) Import of one vehicle is permitted.
    • (c) In case the importer wants to dispose off the vehicle it will be subject to the condition of re-export of the vehicle or sale to the State Trading Corporation of India or to an eligible importer covered by any one of the category C, D, E and F mentioned in this Public Notice.
    • (d) Subsequent import of a vehicle may be made after the disposal of the previous vehicle in accordance with the condition mentioned in (C) above, provided there is a minimum period of five years between two successive imports.

    G. IndiaN FIRMS EXECUTING CONTRACTS ABROAD:

    • (a) Import of vehicle may be made after substantial completion of the project/winding up of the foreign office, subject to the production of a letter of approval from the Reserve Bank of India showing the permission of the Reserve Bank of India for the purchase of the vehicles abroad for the execution of the contract.
    • (b) The vehicle should have been in the use of the firm/company abroad for atleast one year.
    • (c) The vehicle shall not be sold, transferred or disposed off in any manner by the importer for a period of five years from the date of importation of the vehicle into India. If the importer wants to dispose off the vehicle within this period, he shall be free to sell it to the State Trading Corporation of India or to an eligible importer covered by any one of the categories C, D, E and F mentioned in this Public Notice.

    H. CHARITABLE AND MISSIONARY INSTITUTIONS

    • (a) Import of vehicle such as utility vans, ambulances, station wagons, jeeps, passenger cars is permitted as gift, subject to the condition that the importer is an established institution and is functioning for the common benefit of the community, and subject further to the production of necessary clearance under the Foreign Contribution (Regulation) Act, 1970.
    • (b) Payment of Customs duty may be made in Indian Rupees.
    • (c) The vehicle shall not be sold, transferred or disposed off in any manner by the importer for a period of five years from the date of importation of the vehicle into India. If the importer wants to dispose off the vehicle within this period he shall be free to sell it to State Trading Corporation of India or to an eligible importer covered by any one of the categories C, D, E and F mentioned in this Public Notice.

    I. PHYSICALLY HANDICAPPED PERSONS:

    • (a) Import of cars specially designed for the physically handicapped may be permitted on the basis of certificate in the proforma as prescribed in annexure-I appended to this Public Notice, from the State Civil Surgeon or Head of the concerned wing in the Government Hospital, certifying that the importer has any of the following disabilities and the percentage of impairment is not less than 50% of the total body as per Mebride Scale:
      •      i) Unilateral/Bilateral amputees of the lower limbs excluding below knee unilateral.
      •     ii) Unilateral below elbow or above elbow ambuacee.
      •   (iii) Traumatic/permanent paralysis which cannot be surgically or medically treated.
      •    iv) Permanent paralysis of one upper limbs or lower limbs due to any reason or hemipares.
      •    v) Grossly deformed limbs due to trauma arthritis or congenital but having atleast one upper limbs normal.
    • (b) If the car is a gift, confirmatory letter from donor, in original, which should also indicate the donor's relationship with the donee.
    • (c) Satisfactory evidence clearly justifying the need and essentiality for import of a self driven car by the applicant.
    • (d) Import of only one car upto 1600 CC engine capacity will be allowed.
    • (e) Car shall not be allowed to be sold or otherwise disposed off or possession parted with, or pledged, mortgaged or hypothecated, at any time. However, in special circumstances, and for valid reasons, and subject to such conditions as may be laid down, the Director General of Foreign Trade, New Delhi, may on request, relax this condition.
    • (f) The importer shall produce his driving license within 6 months from the date of import, to the licensing authority with whom 'No Sale Bond' is executed.
    • (g) The Customs duty may be paid in Indian Rupees.

    J. HONORARY CONSULS OF FOREIGN GOVERNMENT :

    • (a) Import of one passenger car is permitted on the recommendation of the Ministry of External Affairs provided the cost of the car, including freight and insurance, is borne by the foreign government and the Customs duty is paid by the applicant in Indian Rupees at the time of Import.
    • (b) Import of a second car will be permitted after a period of five years from the date of importation of the first car subject to the condition of re-export of the previous vehicles or its sale to the State Trading Corporation of India or an eligible importer covered by any one of the categories C, D, E and F mentioned in this Public Notice.
  • On import of the vehicle into the country, it should be registered in the name of the importer. The importer, except those covered by categories 'A ' and 'B', shall execute a bond in the prescribed form, for an amount equal to Customs assessed CIF value of the vehicle in favour of the President of India at the regional licensing office concerned of the Director General of Foreign Trade, undertaking to fulfill the conditions applicable to import. The bond shall be valid for a period of five years and it may not be supported by a bank guarantee.

    If the importers are employees of the Central Government, State Governments or Public Sector Undertakings posted in Indian Embassies/High Commissions abroad or in foreign Offices of Public Sector Undertakings they may make the payment of the Customs duty in Indian Rupees. In their case, the sale of the vehicle will not be permitted for a period of two years from the date of importation. However, if they make the payment of Customs Duty in convertible foreign exchange, there will be no restriction on the sale of the imported vehicle.

    The provisions of the Public Notice may be relaxed on merits by the Director General of Foreign Trade.

    See the The Indian Department of Road Transport & Highways for more information.

     

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