In this article, Shitij Oberoi of VIPS discusses how to Import luxury cars and bike in India.
Importing luxury cars and bike in India
We all get drooled when we see a high-end supercar or superbike on road fantasising how would it feel to be behind the wheels of such an expensive vehicle with enormous power under the hood.
Well, a lot of us might be thinking it requires a hefty amount to buy these vehicles in India since past decade has been a huge leap in our automobile sector with the most expensive rides from renowned manufacturers like Ferrari, Ducati, Lamborghini, MV Agusta, Bentley, Rolls Royce have been launched officially in India by the manufacturers themselves either independently or with joint ventures.
For example, the Indian company DSK group and Italian Bike makers Benelli have their JV as DSK-Benelli selling their bikes in India. Demergers have also been observed when a new brand acquired a strong popularity in India like recent Kawasaki and Bajaj demerger which means Kawasaki will no longer take aid from Bajaj for their sales and service network.
Having said that interest of the International Automobile manufacturer towards in India is like they see it as a Potential market and not a full-fledged market where they can roll out their full product line-up because the sales figures won’t suffice for their existence in this market. Iconic brand “Mercedes’s Indian sales figures contributes only 0.6% of the global sales for the company”- as told by Mercedes Sales Executive himself from Mercedes T&T Motors, Rajouri Garden, Delhi.
Very recently General Motors India popularly known as Chevrolet had to wind up from India due to poor sales. That’s’ why many of these mean machines are still not available in India, kudos to our roads and foreign policies which are unfavourable to manufacturers. Moreover, our government insists on manufacturing the automobile locally and discourage assembling it locally via CKD route (completely knocked down) which means bringing a vehicle into parts and assembling it or as a CBU (Completely Built Units) which means a completely built vehicle in one piece. The latter has the maximum import duty and taxes while the former has a little bit of relaxation.
The people who can afford to pay hefty imports and customs duties are no doubt millionaires but they are paying such an amount which is twice or thrice of the price of that vehicle when compared to the local market of the manufacturer.
These very minimal number of millionaires in our country attract luxury car makers to either introduce their car in India or the Buyer chooses the easy way out by IMPORTING the single pieced vehicle.so make sure you are either a uber-cool enthusiast who loves to have collectables or either you are a millionaire who wants to have a bling in his Garage.
Do you really need to Import a Vehicle?
It is always good to consider some alternatives to the car before opting for the import. The car or bike being imported can be full of hassles apart from custom or import duties, like service network, repairs, parts availability which can be a heck for the imported vehicle.
Also, the fuel used for imported sports cars and bikes is not the normal Unleaded petrol. They need the right diet which means that they run on 98 Octane fuel which is not available easily in our country. In Delhi itself, we have only 3-4 fuel station where 98 Octane is available else people have to compromise with normal 93 Octane for their exotic machines which might not allow the vehicle to perform at its full potential and may have the tendency to damage the engine.
So considering the car or bike which is offering the same level of performance or luxury available in India by the manufacturer itself is always a good option rather to go for the Import route because there would be much fewer hassles regarding the car’s parts, servicing and most importantly the warranties of the such an expensive vehicle.
Procedures and Legalities for Importing a Vehicle in India.
So let us understand what are the procedures and legalities and pre-requisites involved which are as follows-
As per the Notification passed by the Ministry Of Commerce And Industry under Foreign Trade (Development and Regulation) Act, 1992, DGFT has laid following provisions under ITC (HS) for categories of Chapter 87 (which includes EXIM policies and requisites for cars and bikes) which states that.
- New imported vehicle means-
A. Which is not manufactured in India
B. Which has not been loaned, leased or sold before importation to India
C. Which has not been registered to any country according to the laws of that country before importation to India. - The units of the speedometer should be in metric units rather than Imperial unit (KM/h instead of MP/h)
- The car should be Right Hand Drive which means the steering and controls should be on the right-hand side of the car.(not applicable for bikes)
- Headlamps should suit the “keep left” traffic.
- It should be imported from the country of the manufacturer. Incase the manufacturer’s country is an inland country and the vehicle are stored in some other country for purpose of export by the manufacturer like a warehouse then it will be deemed to be exported from manufacturer’s country provided that there are sufficient sources and document with the manufacturer required to track the shipment of the vehicle from exporting country to importing country.
- The vehicle should be in conformity with provision and rules of Motor Vehicle Act 1988.
- If imported by an importer or dealer,
A. (Homologation Process) at the time of importation certificate of compliance with rule 126 of Central Motor Vehicle Rules, 1989 issued by any of the testing agencies. Which means Road Worthiness Certificate issued by any testing agency.
B. The Importer shall be responsible for all the provisions assigned to the manufacturer as per Rules 122 & 138 of CMVR, 1989.
C. Give an undertaking in writing that the proof of compliance to the conformity of production as per Rule 126A of CMVR shall be submitted within six months of the imports. In the case of failure to do so, no further import of new vehicle of that model shall be allowed thereafter. - The import is permitted through the custom ports of Nhava Sheva, Kolkata, Chennai, Delhi Air Cargo, Mumbai Port, ICD-Tughlakabad, Cochin.
- The above condition no.1 and 2 of the notification would not apply in below-mentioned circumstances to this category of importers-
A. For the purpose of Defence Requirements
B. For for the purpose of R&D by vehicle manufacturers.
C.NRIs through The Transfer of Residence Scheme if, Individuals coming to India for permanent settlement after two years continuous stay abroad provided the car has been in the possession of the individual for a period of minimum one year abroad.
D. The Car won as an award in some competition/match/event by Indian Resident.
E. The Car was owned by the deceased relat
ive residing abroad and brought back by legal heirs/successors.F. Differently Abled persons.
G. Any religious/charitable institute/Trust working for a community benefit of a community registered with Government of India subject to clearance under Foreign Contribution (Regulation) Act,1976.
H. Foreign Embassies, Diplomats, Bureaucrats with the recommendation of the Government of India.
I. News Reporter of foreign news agency with the approval of Government of India.
J. Indian company having a foreign participation or branch office of the foreign company in India.
- All the categories above mentioned in point no.9 shall be in conformity with one condition that they shall be the right hand driven cars.
- All the categories mentioned in point no.9 shall be allowed to import max 1 vehicle except J which are allowed max 3 vehicles.
- Category J. in point 9 shall only be allowed to import Special Vehicles.
- All the vehicles under point 9 are not for sale for period of 2 years as mentioned to RTO by DGFT
- DGFT can grant relaxation under special circumstances for above-mentioned conditions.
- Category H of point 9 who are exempted to pay customs duty shall be exempted from requisite 1, 2, 3, 4 & 5, now can be sold non-privileged person through procedures of Foreign Privileged Persons (Regulation of Customs Privileges) Rules, 1957.
Prohibited Category for Import of Vehicles
- Cars with engine capacity of 1000cc-2500cc.
- Bikes with engine capacity of 250-800cc.
When Homologation is not required?
Basically, means the certification of the vehicles to be fit to run in our conditions by the testing agency(Emissions, road safety etc). We have testing agencies like ARAI in Pune which certifies the cars with the certificate of roadworthiness. Imported new vehicles of the below-mentioned category is exempted from Homologation (Certification of Homologation process) if they are-
- Cars with Petrol the engine capacity of 3000cc or above or Diesel engine with capacity of 2500cc or above, they are not required to go through the homologation process like ARAI neither the importer’s duty would be held liable for provision under CMVR Act for homologation.
- Motorcycles with engine capacity of 800cc or above are similarly not required to go under homologation process.
- Vehicles with FOB or CIF(cost+insurance+freight) value of $40000 or above.
Though the vehicles exempted in the above-mentioned category still require and certification form any AUTHORIZED TESTING AGENCY OF EU like ECE, NCAP(European Standards of Certification); just before being exported from the origin country.
Now the most awaited part-
How much is the import duty?
According to ITC -HS Codes (Harmonic System Codes) Vehicles are mentioned under the chapter 87 of the HS codes. In this chapter various categories and subcategories are mentioned according to engine type or vehicle type like two wheelers / three wheelers / four wheelers / Special vehicles like broadcasting vans, tractors, cranes etc.
So luxury cars fall under the category of HS code- 8703 24 Which includes racing cars as well
With cylinder capacity of 3000cc or above
Whereas motorcycle with cylinder engine capacity of 800cc or above are also mentioned in chapter 87 under the head 8711 50 which talks about the import duty rate of motorcycles as-
So the Import duty for the Cars is total of whooping 165% of the CIF value (Cost+freight+Insurance) and for the bike it is a bit less at 116% of the CIF value.
Additionally, registration with the RTO will also apply as applicable by the State Government.
Conclusion
Well by just reading the conditions and complications involved in the Import of the vehicles half of the people seeking to import might have changed their decision to not to import the vehicle since conditions and infrastructure of India is still not favourable to the imported the vehicles. So before importing consider all the option available in that segment of the vehicle. Import a vehicle only if it is must and you are not willing to compromise and there’s no other alternative or option available.
Not only you need to spend more than twice which will be a hole in your pocket, also it will be a serious task to take care of the maintenance.
