Import duty on cars in India: A complete guide for 2025

India, with its ever-growing automotive market, has become a key player in the global car industry, making the process to import cars a topic of great importance for car enthusiasts and potential buyers alike. However, the process of importing cars, understanding the import duty on cars in India, and navigating through various rules and regulations can be overwhelming. In this detailed guide, we will break down everything you need to know about import duty, customs duty, and the process of importing foreign cars into India.

Understanding the import duty on cars in India

Import duty refers to the taxes levied on goods that are imported into a country. When it comes to foreign vehicles or imported cars, India follows strict regulations and high duties, including custom duty, that make it a significant part of the overall cost. The import duty on cars in India can vary based on several factors such as the value of the car, the engine capacity, and whether it is a used or new car.

For a brand-new foreign vehicle, the import duty is often calculated based on the car’s value, which includes the cost, insurance, and freight (CIF). Generally, import duties for luxury cars and high-end brands are higher, while used cars might attract different rates depending on their age and condition.

As per the rules laid out by the Central Motor Vehicles Act and Central Motor Vehicle Rules, vehicles being imported into India must meet specific criteria regarding safety standards, emission standards, and manufacturing date. Understanding these regulations is essential to ensure that the car is eligible for import.

Conditions for importing foreign cars

When importing foreign cars to India, certain conditions need to be met to ensure compliance with regulations for import vehicles. Some of the primary requirements include:

Eligibility of the vehicle: The vehicle should not be older than three years.

Right-hand drive: The car should ideally have a right-hand drive, as left-hand drive vehicles are allowed only under specific conditions, such as for testing or research purposes.

Ports of entry: Imported cars must enter India through designated ports like Kolkata, Chennai, or Mumbai. These ports are equipped to handle the import of vehicles.

Headlamp specifications: The vehicle’s headlamps should be suitable for Indian road conditions and should illuminate the right side of the roadway.

Speedometer in kilometers: Speedometers on the vehicle should display speeds in kilometers per hour (km/h), not miles per hour (mph).

Rules to import a used car

Importing a used car to India is subject to stricter regulations compared to a new imported car. Here’s what you need to know:

Manufacture date: The used car should not be older than three years from the date of manufacture.

Vehicle specifications: The car must adhere to the road safety regulations laid out by the Central Motor Vehicle Rules and Central Motor Vehicles Act. The car’s emission standards should meet Indian norms, or the vehicle may be required to undergo modification.

Right-hand drive: The car must have a right-hand steering, as left-hand drive vehicles are not suitable for Indian roads.

Who can import commercial vehicles to India?

The rules for importing commercial vehicles are slightly different from passenger cars. Individuals and businesses wishing to import commercial vehicles must meet certain criteria:

Foreign nationals: Foreign nationals residing in India for more than one year can import commercial vehicles.

Businesses: Indian businesses with foreign ownership can also import commercial vehicles for business operations.

Relatives of deceased foreign nationals: Relatives of foreign nationals who have passed away and left behind a vehicle can import it under special circumstances.

People with disabilities: Persons with physical disabilities may be eligible to import a vehicle under specific guidelines.

Additionally, documentation from the Export Credit Guarantee Corporation may be required to facilitate the import process.

Procedure for import of foreign car

The import process of foreign cars involves several steps:

Documentation: To import a car, the owner must submit documents like the car’s purchase order, import license, Duty Exemption Entitlement Certificate, and proof of identity.

Customs duty: Upon arrival, the car will undergo customs clearance, and the importer must pay the applicable customs duties. The duty varies based on the engine capacity, value, and age of the vehicle.

Registration: Once cleared by customs, the car must be registered with the Regional Transport Office (RTO). This involves paying road tax, which is mandatory for all vehicles operating on Indian roads.

Things to consider before importing a car to India

Before starting the import process, here are some important things to consider:

Import tax: The import duty for cars can be substantial. The basic customs duty for most vehicles is around 100% of the vehicle’s value, but it could vary depending on the car’s category and engine capacity.

Engine capacity: Cars with larger engine capacities are subject to higher duties. The import duty on cars with engine capacities above 3,000cc can go up to 160%.

Road tax: After the car is cleared from customs, you will need to pay road tax at the local RTO. This is a one-time payment based on the car’s value.

Insurance coverage: Make sure that the car is insured before being shipped to India. Having proper insurance coverage will protect the car during transit and after arrival.

Vintage car: If you are considering importing a vintage car, be aware that vehicles manufactured after January 1, 1950, are subject to specific customs and regulatory requirements. The process can be complex and requires necessary approvals from relevant authorities.

Can left-hand drive vehicles be imported to India?

Left-hand drive vehicles can be imported to India, but under specific conditions. Most vehicles in India are designed for right-hand drive. However, left-hand drive vehicles are allowed only for special purposes such as testing, research, or for foreign nationals living in India. These vehicles must undergo modifications to meet Indian road safety standards.

How much does it cost to import a car to India?

The cost to import an imported vehicle to India can vary widely depending on several factors:

Value of the car: The higher the value of the car, the higher the import duty.

Shipping costs: Shipping a car to India involves various costs such as cost, insurance, and freight (CIF).

Taxes and duties: In addition to the customs duty, you will need to pay other taxes such as road tax and registration fees.

Overall, importing a car can cost anywhere between 190,000 to 190 million INR, depending on the car’s make and model.

Can we import car engines to India?

Yes, import car engines into India, provided that they meet certain criteria. New engines can be imported relatively easily, but old engines or used engine parts are subject to more scrutiny. The Indian government imposes regulations to ensure that the imported engine capacity complies with the country's environmental and safety standards. Importers should be cautious about meeting these regulations to avoid penalties.

Can an NRI import a car to India?

Non-Resident Indians (NRIs) can import their cars to India, but there are specific rules to follow:

Ownership duration: The car must be owned by the NRI for at least one year before importing it into India.

Vehicle compliance: The car must meet Indian road safety and emission standards, and the NRI must pay the applicable import duty.

Types of import duty on cars in India

Importing foreign cars to India involves various types of import duties, which are levied by the Indian government to regulate the import of vehicles and generate revenue. The main types of import duty on cars in India are:

Basic customs duty (BCD): This is the primary duty levied on imported cars, which ranges from 60% to 100% of the car’s value, depending on the engine capacity and type of vehicle. For instance, a car with an engine capacity of up to 1,600cc might attract a BCD of 60%, while a car with a larger engine capacity could face a BCD of 100%.

Countervailing duty (CVD): This duty is imposed to counter the export subsidies provided by the exporting country. The CVD rate is typically 12.5% of the car’s value, ensuring that imported cars do not have an unfair price advantage over domestically produced vehicles.

Special additional duty (SAD): This duty is levied to offset the excise duty that would have been payable if the car were manufactured in India. The SAD rate is 4% of the car’s value, contributing to the overall cost of importing a vehicle.

Additional duty of customs (ADC): This duty is imposed to offset the sales tax that would have been payable if the car were sold in India. The ADC rate is also 4% of the car’s value, further adding to the import cost.

Understanding these different types of import duties is crucial for anyone considering importing a car to India, as they significantly impact the total cost.

Customs duty

Customs duty is the primary duty levied on imported cars in India. The customs duty rate varies depending on the engine capacity and type of vehicle. For example, cars with an engine capacity of up to 1,600cc are subject to a customs duty of 60%, while cars with an engine capacity above 1,600cc are subject to a customs duty of 100%. This differentiation ensures that higher-capacity, often more luxurious vehicles, contribute more significantly to the revenue generated from imports.

Additional taxes and fees

In addition to import duties, imported cars in India are also subject to various taxes and fees, including:

Goods and services tax (GST): This is a value-added tax levied on the sale of goods and services in India. The GST rate on imported cars is 28%, which is a substantial addition to the overall cost. This tax is applied uniformly across all states, ensuring a standardized tax structure for imported vehicles.

Road tax: This is a tax levied by the state government on the registration of vehicles. The road tax rate varies depending on the state and type of vehicle. For instance, luxury cars might attract a higher road tax compared to standard vehicles, reflecting their higher value and potential impact on road infrastructure.

Registration fee: This is a fee levied by the state government on the registration of vehicles. The registration fee rate varies depending on the state and type of vehicle. This fee is a one-time payment required to legally operate the vehicle on Indian roads.

Car insurance and registration

Imported cars in India must be insured and registered with the relevant authorities. Car insurance is mandatory in India, and the premium rates vary depending on the type of vehicle and insurance provider. Comprehensive insurance coverage is recommended to protect against potential damages during transit and after arrival.

Registration of imported cars involves obtaining a registration certificate from the Regional Transport Office (RTO) and paying the relevant registration fees. This process ensures that the vehicle is legally recognized and can be driven on Indian roads. The registration process also includes the payment of road tax, which is a significant component of the overall cost.

Regulations and requirements

Importing foreign cars to India is subject to various regulations and requirements, including:

Homologation: Imported cars must comply with the safety and emission standards set by the Automotive Research Association of India (ARAI). This process ensures that the vehicle meets the necessary criteria to be safely operated on Indian roads.

Compliance with central motor vehicle rules: Imported cars must comply with the Central Motor Vehicle Rules, 1989, which govern the safety and emission standards of vehicles in India. These rules are designed to ensure that all vehicles, whether imported or domestically produced, adhere to the same safety and environmental standards.

Compliance with central motor vehicles act: Imported cars must comply with the Central Motor Vehicles Act, 1988, which governs the registration and regulation of vehicles in India. This act outlines the legal requirements for vehicle registration, roadworthiness, and other essential aspects of vehicle operation.

Homologation and compliance

Homologation is the process of certifying that a vehicle meets the required safety and emission standards in a particular country. In India, imported cars must be homologated by the ARAI or other authorized agencies. This process involves rigorous testing to ensure that the vehicle complies with Indian standards.

Compliance with the Central Motor Vehicle Rules and Central Motor Vehicles Act is also mandatory for imported cars in India. These regulations ensure that the vehicle is safe to operate and meets the necessary environmental standards. The ARAI plays a crucial role in this process, conducting vehicle research and testing to certify compliance.

By understanding and adhering to these regulations and requirements, importers can ensure that their vehicles are legally compliant and safe for use on Indian roads.

Frequently asked questions (FAQs)

How much is the import tax on cars in India?

The import tax can vary, but import duty is generally around 100% for most vehicles.

Will India reduce import duty on cars?

There is no official announcement yet, but import duties in India have remained high to promote domestic car manufacturing.

What is the import duty on cars in India 2025?

The import duty on cars in India will likely remain similar, ranging from 100% to 160%, depending on the engine capacity.

Can we import a second-hand car in India?

Yes, but the second-hand car must be less than three years old and meet Indian road safety standards.

How much is the import duty on luxury cars in India?

Luxury cars often attract higher import duties. The duty can range from 100% to 160%, depending on the value and engine capacity.

How much is the import tax for EV cars in India?

The import duty on EV cars is typically around 100%, though this could change as India focuses more on promoting electric vehicles.

What are the additional costs after importing a car to India?

After importing a car, you will need to pay for registration and road tax at the local RTO, which are separate from the import duty.

Conclusion

Understanding the import duty on cars in India and the rules surrounding the importation of foreign vehicles can help you make an informed decision if you wish to import a car to India. With high customs duties, strict regulations, and numerous other considerations, importing a car into India requires careful planning. However, with the right guidance and knowledge, you can navigate this complex process smoothly. Whether you are an NRI, a car enthusiast, or a business looking to import commercial vehicles, this guide provides you with all the details you need to import a car into India successfully.

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