Custom duty on imported cars in India

As one of the most populous countries on the planet, India is home to a vibrant and bustling motor vehicle market, particularly when it comes to used vehicles. However, India is a complex country, and this is especially true of its laws and regulations pertaining to the import of used motor vehicles from the United States and elsewhere.

If you’re interested in used imported cars in India for sale and other types of used or salvage vehicles from the United States , then you have to go about things the right way. That’s why we’ve put this guide together! Here, you will learn everything you need to know about the process for importing used cars into India. We’ll discuss everything from customs clearance, duties and taxes to what vehicles are the most popular in this country, as well as everything in between.

Purchasing Used Vehicles at U.S. Online Car Auctions

When attempting to get the best deal on a used car in the United States, the place you should begin your search is in online car auctions. Through websites that provide this service, you can stand to save up to 80% on the value of used cars, something that will come in handy when navigating the expensive custom duty on imported cars in India and taxes assessed on imported used vehicles.

To get started with an online auction of cars site in india, you merely need to create an account and make an initial deposit. The deposit is necessary in order to establish your bidding power, with its value typically representing 10% of what your maximum bid can be. For example, were you to deposit $1,000, you would then be able to bid up to $10,000 (it’s a lot of lakhs) on a used vehicle or several.

To get started with an online car auction site, you merely need to create an account and make an initial deposit. The deposit is necessary in order to establish your bidding power, with its value typically representing 10% of what your maximum bid can be. For example, were you to deposit $1,000, you would then be able to bid up to $10,000 on a used vehicle or several.

Once your account is created and your deposit made, you will be able peruse a database of used car auctions taking place across the United States. In addition, you will also be given access to an auction broker or agent, who can assist you throughout the entire process. He or she can help you research vehicles that you’re interest in, and can even connect you with used car auctions that cannot be displayed publically online. All of this helps you to find the right car (or cars) at the right price, something every consumer or importer-exporter can appreciate!

Shipping a Used or Salvage U.S. Car to the India

India is home to one of the largest economies in the entire world, and as such you should have little difficulty finding a port in the United States that offers shipping services to the country. However, you will need to choose a proper shipping method depending upon your budget and needs. Of course, you can ship used U.S. vehicles to India via traditional container shipping, but there is another option you should be aware of.

This other option is called RORO shipping. RORO is short for “roll-on roll-off”, which accurately describes the method by which your used car will be loaded onto and then off of the ship. Because there is no container involved, and thus none of the labor involved with loading and unloading a container, RORO shipping is by far the cheaper method. In addition, you’ll find that RORO shipping for used vehicles is far more convenient, allowing you to gain much quicker access to your vehicle once it arrives.

If you do elect this shipping method, though, you should understand that there are a few drawbacks. Without the protection of a container, your used vehicle will be exposed to the elements. Further, it might become necessary for your ship workers to move your vehicle while the boat is in transit. Because of these two factors, there is the possibility that your used vehicle could become damaged during the shipping process.
Provided you’re willing to accept the risk, RORO shipping is incredibly cost effective. However, if you’re shipping a valuable vehicle, one which you would not be willing to accept even minor damage, then container shipping is far and away the preferred method. As mentioned, it really comes down to assessing your budget and your needs!

When it comes to choosing an arrival port in India, there is only one option. All used vehicles imported into India must arrive at The Port of Mumbai, which is the 33rd busiest port in the entire world. The port is overseen by an entity known as the Mumbai Port Trust, which is itself owned entirely by the Indian government. To learn more about the Port of Mumbai and to receive any answer, you can consult the port’s official website right here.

Clearing Your Used Vehicle Shipped to India Through U.S. Customs

The process for clearing your used vehicle through U.S. customs on its way to the Port of Mumbai is an incredibly straightforward process. You only need to pay attention to arranging the proper documentation and to abiding by the proper timing for filing your documentation and submitting your used vehicle for inspection.

When it comes to documentation, the most important thing that you need to have is your vehicle’s Original Certificate of Title. In addition to this, you will also need to provide U.S. customs with either a certified copy of that Original Certificate of Title or two complete copies of the Original Certificate of Title.

These documents along with your vehicle must be submitted to U.S. customs at your chosen port of departure at least 72 hours in advance of your vehicle’s ship date. In order to find out where the documents and your vehicle must be present, simply contact the Port Director at the specific U.S. port that you’ve chosen.

Once U.S. customs has possession of your vehicle and documentation, they will do two things. First, they will inspect the vehicle to ensure that there is no illegal contraband stowed away. Second, they will review your documents and ensure that the Certificate of Title accurately refers to the vehicle presented. To do this, they will cross-reference the Vehicle Identification Numbers (VINs) present on both vehicles.

Provided that your vehicle passes inspection and all of your documentation is in order, U.S. customs will then clear your vehicles. After this, it will be loaded onto the ship and then sent on its way to India. Should you have any additional questions about the process for clearing a used car through U.S. customs, please consult this guide provided by U.S. Customs and Border Protection.

Getting Your Used or Salvage Car Through Indian Customs

For a variety of different reasons, not the least of which are the import duties and taxes (discussed in the next section), importing a used vehicle into India can be a complicated process. For this reason, we recommend that you secure the services of a qualified customs broker when shipping your used U.S. vehicle to India. If, however, you are determined to go it alone, this is what you will need to do in order to clear your used vehicle through Indian customs.

First, remember that your used vehicle MUST be shipped to The Port of Mumbai and nowhere else. Second, you will also need to supply the following documentation along with your vehicle:

  • The Original Certificate of Title
  • The Original U.S. Vehicle Registration
  • Bill of Landing
  • Proof of Insurance
  • Proof of Vehicle’s Roadworthiness for the Past Five (5) Years
  • Proof of Residency (If You Intend to Sell the Vehicle)

There are a number of restrictions placed upon imported used vehicles that you should be aware of. First, India expressly prohibits the import of left-hand drive used vehicles. This means that you will need to convert a vehicle from left-hand to right-hand drive before importing it into the country. In addition, all used vehicles imported into the country must have been roadworthy for a period of at least five years prior to their import. (This last point is something you should definitely keep in mind when bidding on used vehicles through online used car auctions.)

In addition to the above, all imported used vehicles must be submitted for inspection to the relevant authority. In most cases, this will be the Vehicle Research and Development Establishment (VRDE). In addition to assessing the roadworthiness of your imported vehicle, they will also check to ensure that your used U.S. vehicle meets India’s increasingly stringent emissions guidelines. To learn more about these guidelines, known as the “Bharat Stages”, please consult this website.

To learn more about the various restrictions placed upon used cars imported into India, please consult the text of India’s Motor Vehicle’s Act, 1998.

Import Duties and Taxes for U.S. Vehicles Imported into India

Importing a used car into India can quickly become an expensive proposition due to the unusually high import duties in tax. In fact, one can often find themselves paying more than a given used vehicle is worth, sometimes up to 125% of a vehicle’s cost, when all relevant duties and taxes have been paid. For this reason, you may find it advisable to work with a customs broker when importing a used car from the United States into India. He or she will be able to navigate India’s complex import duty and tax system, ensuring that you pay the lowest amount possible.

If you are going to go it alone, though, we will provide you with a basic overview of India’s import duties and taxes for used cars. The first thing to know is that all duties and taxes are assessed based upon the car’s CIF value. CIF stands for “Cost, Insurance, Freight”, representing the total cost of the vehicle, the cost of shipping insurance, and the total cost of shipping the used vehicle to India.

In the case of used vehicles, India calculates a vehicle’s value by starting with its new-car value and then depreciating the value according to the following formula:

  • For the 1st year, the value is depreciated 4% for every quarter.
  • For the 2nd year, the value is depreciated 3% for every quarter.
  • For the 3rd year, the value is depreciated 2.5% for every quarter.
  • For the 4th year, the value is depreciated by 2% for every quarter.
  • For every year thereafter, the value is depreciated by 2% for every quarter.

In total, the maximum percentage by which the value of a car can be depreciated is 70%.

For used vehicles, the import tariff is 60% of the used vehicle’s CIF value. In addition to this, a number of duties, excise taxes and other taxes are assessed. These include:

  • A Countervailing Excise Duty (CVD) of 12%
  • Basic Excise Duty of 10%
  • A Variable Special Excise Duty (SED)
  • A Value Added Tax (VAT) that Varies by State (Often Set to 14.5%)
  • A National Calamity Contingent Duty (NCCD) of 4%
  • And More…

As you can see, the duties and taxes assessed on used vehicles imported from the United States into India are incredibly complex. If you’d like to read more about them, you can consult All Indian Taxes, a helpful website. In addition, you can consult this schedule of import duties and taxes provided by the Indian government.

The Used Car Market in India

According to information compiled by the United States Department of Commerce and the International Trade Administration, two-wheeled vehicles dominate the new and used vehicle markets in India. In fact, roughly 81% of all vehicles sold in the country of are the two-wheeled variety, with 70% of those falling under the category of motorcycles and a further 21% being classified as scooters. This has a lot to do, as you might expect, with the crowded state of India’s cities and towns.

Speaking of four-wheel passenger vehicles, one should note that the market is primarily dominated by domestically manufactured vehicles. This is due in no small part to the exorbitant duties and taxes assessed on used vehicles imported into India from the United States and elsewhere. That said, there is some demand for imported used vehicles among Indians with the disposable income to pay for the markup.

When seeking to export used vehicles from the United States to India for the purpose of selling them, be sure to keep the country’s ever-stringent environmental regulations in mind. In the years to come, India’s rules regarding the environmental impact of vehicles are expected to become even more onerous than those in place in Europe. Therefore, you’ll want to focus your attention on fuel-efficient vehicles, and perhaps even on hybrid vehicles. (Electric could be interesting in years to come, but for now the infrastructure needed for such vehicles is lacking in many places across India.)

Updated: October 1, 2019 — 9:20 am

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