Automobile Import Rules in India: What You Need to Know

When you buy a car in India that was built abroad, you're not just paying for the vehicle—you're paying for automobile import rules, the set of government policies that control how vehicles enter India, including taxes, safety checks, and local content requirements. Also known as CBU import regulations, these rules determine everything from price tags to which brands even make it to Indian showrooms. These aren't just paperwork—they're economic tools designed to protect local manufacturing under the Make in India initiative.

India treats imported cars differently based on how they arrive. Completely Built Units (CBUs) face the highest duties—sometimes over 100%—because they're fully assembled overseas. Compare that to SKD or CKD kits, where parts are imported and assembled locally. That’s why a BMW or Mercedes costs nearly double in India compared to Europe or the U.S. The government wants you to buy cars made here, not shipped in. But there’s a catch: some luxury and specialty vehicles can’t be made locally yet, so exceptions exist. Electric vehicles get slightly better treatment, with lower duties to encourage adoption. Meanwhile, used cars are almost entirely banned unless they’re vintage models or brought in by returning citizens under strict limits.

It’s not just about taxes. Every imported car must pass crash safety tests, emissions standards, and homologation checks by the Automotive Research Association of India (ARAI). Even if a car is sold in the U.S. or Germany, it won’t automatically qualify here. That’s why some global models never reach Indian dealerships—they’re too expensive to modify for local rules. On the flip side, companies like Tesla and BMW have set up local assembly lines to dodge the worst of these fees. And while you might think this is just about protecting Indian factories, it’s also about controlling quality and reducing pollution. The rules are strict, but they’re not random—they’re tied to bigger goals like reducing oil imports and growing domestic engineering jobs.

If you're thinking of importing a car yourself—whether it’s a classic, a rare model, or a high-end EV—you’ll need to work with a licensed agent, pay customs clearance fees, and submit documents proving the vehicle’s origin and condition. It’s not impossible, but it’s rarely worth the hassle unless you’re dealing with something truly unique. For most people, the real story behind automobile import rules isn’t about access—it’s about why so many cars are priced the way they are, and who benefits from the system.

Below, you’ll find real examples of how these rules play out in the market—from the cost of a single imported car to the companies that’ve changed their strategy to survive them.