Customs Duty in India: How Import Valuation Actually Works
Customs duty isn't a flat percentage on invoice value, valuation rules, HS classification, and applicable exemptions all move the landed cost, often by more than companies budget for.
Basic Customs Duty (BCD) rates in India vary widely by HS code, from single digits on some industrial inputs to 20%+ on finished consumer goods, and BCD is only the starting point. Add IGST (charged on assessable value plus BCD, not on invoice value alone), Social Welfare Surcharge, and any applicable anti-dumping or safeguard duty, and the effective landed cost commonly runs 8 to 15 percentage points above what a simple invoice-value-times-BCD calculation would suggest.
Misclassification under the wrong HS code is the single most common cause of customs disputes for foreign companies new to Indian trade, it changes both the duty rate and eligibility for any preferential tariff under a trade agreement. A classification review before the first shipment, not after a customs query, is the cheaper way to find out.
Companies importing capital goods or raw materials for manufacturing should also check EPCG and other duty-exemption schemes before shipping, several route around a meaningful chunk of BCD for export-oriented or manufacturing-linked imports, but only if applied for in advance.