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Importing Cars to India

Car industry in India is huge and promising. The country has witnesses a self-sustained and integrated growth, which in turn has increased the number of exports and imports in the country. This self-sustained and integrated industry has further added to the country’s economic growth.

Car import has become the largest and the most dominant sector of the Indian economy. The performance of the sector is greatly influenced by the norms of the import policy of India.
General Guidelines for Importing Cars to India

bullet For import of new cars :

  • The car should not be assembled or manufactured in India.
  • Any new cars should not be sold or leased before importing it to India.
  • New cars having prior registration in any other country is restricted for import.
  • New cars should have a speedometer, right hand steering and controls, photometry of the headlamps should be imported from the country of manufacture.
  • New cars shall conform to the provisions of Motor Vehicles Act, 1988 and the applicable rules as on the import date.
  • Import of all new cars permitted only through the Customs port at Nhava Sheva (Mumbai), Calcutta and Chennai.

bullet For import of used or second hand cars :

  • The car should not be used for more than three years.
  • It should have the right hand steering, right hand controls, speedometer and photometry of the headlamps.
  • Second hand or used cars shall conform to the provisions of the Motor Vehicle Act, 1988 and the applicable rules as on the date of import.
  • Import of used cars shall be allowed only through the customs port at Mumbai.
  • The car should have a minimum roadworthiness for a period of 5 years and the exporter should provide a declaration to support the roadworthiness.
  • The car should also have service facilities in the country for the next five years.

bullet Valuation of Cars :

Whether it’s new or used car, the value is determined by either accepting the manufacturer’s invoice based on the world car catalogues or on the basis of manufacturer’s price list. Value of cars for the purpose of levy of customs duty is CIF value, where C stands for cost of the goods, I is the insurance and F is the freight cost. In case of new cars, freight cost is the transaction value between the seller and the buyer, whereas in case of second hand or used car, freight cost is the value calculated after depreciation. The depreciations allowed are based on the number of the years the car has been used. The depreciations are allowed as per the following:
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%

bullet Duty Rates :

The total effective duty rate works out to be 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)

bullet Import Policies :

When it comes to the actual import policy for importing cars to India, there are various situations to consider. Different situations have different norms and regulations for importing cars. Import of passenger cars and automobile vehicles can be done without a license depending on the following categories:

bullet Persons coming to India for permanent
   settlement :

  • The car imported should be used by the importer for at least one year and above and the payment should be made abroad.
  • The car should have an engine size of maximum four cylinders and 1600 cc.
  • The importer should have stayed in any foreign country continuously for a period of at least two years prior to his entry and within next six months the car should be imported.
  • After returning to India, importer has the freedom to sell his car in the open market.

bullet Foreign nationals married to Indian nationals :

  • Foreign nationals can only import one car if he or she is getting married to the Indian national and settle permanently in India.
  • The car is gifted to the couple by their parents during the first year of their married life.
  • After returning to India, importer is free to sell his or her car in the open market.

bullet Foreign Nationals working in India :

  • Foreign National who has worked for minimum one year can import one car.
  • If he is interested in buying another car or vehicle he can’t do so unless and until the old car is disposed or sold out in the market.
  • There should be at least a gap of five years between two subsequent imports.

bullet Companies incorporated in India having foreign    equity :

  • An Indian company is permitted to import only three cars or vehicles and the payment is made in accordance to the customs duty in the foreign exchange.
  • The Indian company can import only one car or vehicle in a period of five years.
  • A new car can be imported only if the previous car is disposed with subject to the condition of re-export of the car or sale to the State Trading Corporation of India.

bullet Journalists/Correspondents of Foreign News    Agencies :

  • One car or vehicle is permitted for import only after receiving the Accredition Certificate from the Press information Bureau, Ministry of Information 7 Broadcasting, Government of India.
  • A new car can be imported only if the previous car is disposed with subject to the condition of re-export of the car or sale to the State Trading Corporation of India.
  • Two subsequent car imports should have a gap of minimum five years.

bullet Indian firms executing contracts abroad :

  • Import is permitted only after substantial completion of the project or winding up of the foreign office.
  • Before importing the importer must show a letter from the Reserve Bank of India showing the permission for the purchase of the car abroad for the execution of the contract.
  • The car imported should be used by the contracted company for minimum period of one year.
  • A new car can be imported only if the previous car is disposed with subject to the condition of re-export of the car or sale to the State Trading Corporation of India.
  • Two subsequent car imports should have a gap of minimum five years.

bullet Physically handicapped persons :

Import of cars specially designed for the physically handicapped requires a certification from the State Civil Surgeon or Head of the concerned wing in the Government Hospital, certifying any of the following disabilities in the importer:
  • Unilateral/Bilateral amputees.
  • Unilateral elbow ambuacee.
  • Traumatic/permanent paralysis.
  • Permanent paralysis.
  • Grossly deformed limbs.

bullet Honorary consuls of foreign government :

  • Import of one car permitted on the recommendation of the Ministry of External Affairs.
  • A new car can be imported only if the previous car is disposed with subject to the condition of re-export of the car or sale to the State Trading Corporation of India.
  • Two subsequent car imports should have a gap of minimum five years.

bullet Source :

The above information is sourced from an official website:
http://www.indian-embassy.dk/Pages/Others/import of car.htm

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