Complete guide to importing machinery and capital goods to India. EPCG scheme at 0% BCD, customs clearance for industrial equipment, project cargo handling, and HS classification support from Bengaluru's licensed CHA.
Capital goods import to India attracts total effective duty of 28–32% of CIF value for most machinery, unless imported under the EPCG scheme at 0% BCD. The process spans 4–8 weeks including freight, customs clearance at ports like JNPT and Chennai, and inland delivery.
Capital goods under Indian customs law are tangible assets used in the production of goods or services, not consumed or transformed during the manufacturing process. They fall primarily under HS Chapter 84 (mechanical machinery) and Chapter 85 (electrical equipment), though some specialised equipment may appear in Chapters 90 or 91.
For manufacturing industries, capital goods include CNC machining centres, injection moulding machines, hydraulic presses, and industrial robots. Food processing units import packaging lines, vacuum fillers, and retort machines. Pharmaceutical manufacturers require tablet presses, fluid bed dryers, and granulators. Textile mills import air-jet looms, circular knitting machines, and dyeing equipment. The energy sector brings in diesel generators above 75 kVA, power transformers, and switchgear. IT and electronics manufacturers import PCB assembly lines, SMT placement machines, and reflow ovens. Each category demands precise HS code classification because a single digit difference can shift duty from 7.5% to 10% or trigger additional regulatory requirements.
Capital goods differ from consumables and raw materials in one critical way: they are balance-sheet assets depreciated over time. This distinction determines whether you can claim the EPCG scheme (capital goods only) or must use Advance Authorisation (raw materials). When in doubt, refer to the Customs Tariff Act, 1975, and the Foreign Trade Policy 2023, which define capital goods as "any plant, machinery, equipment, or accessories required for manufacture or production."
Import duty on capital goods arriving in India is calculated on the CIF value — cost of goods, insurance, and freight to the Indian port. The three-layer structure starts with Basic Customs Duty (BCD), which is 7.5% for most machinery under Chapter 84 and 7.5%–10% for electrical equipment under Chapter 85. Next, Social Welfare Surcharge (SWS) is levied at 10% of the BCD amount. Finally, Integrated GST (IGST) is charged at 18% on the cumulative value of CIF plus BCD plus SWS.
| Category | HS Chapter | BCD | IGST | Approx. total effective duty |
|---|---|---|---|---|
| General machinery | 84 | 7.5% | 18% | ~29% |
| Electrical equipment | 85 | 7.5–10% | 18% | ~29–32% |
| Agricultural machinery | 8432–8436 | 0–2.5% | 12% | ~12–14% |
| Medical equipment | 90 | 0–10% | 5–12% | ~5–22% |
| Under EPCG scheme | Any | 0% | 18% | 18% only |
Note: these are indicative; actual rates depend on exact HS code classification.
The duty calculation follows a specific formula. First, determine CIF value in INR. Add landing charges at 1% of CIF to arrive at assessable value. Apply BCD on assessable value. Add SWS at 10% of BCD. Then apply IGST on the sum of assessable value, BCD, and SWS. For a machine with CIF value of INR 10,00,000, landing charges are INR 10,000. At 7.5% BCD, duty is INR 75,750. SWS is INR 7,575. IGST at 18% on INR 10,93,325 equals INR 1,96,798. Total duty: INR 2,80,123 — approximately 28% of original CIF. This stacking makes duty the single largest cost after the machine itself.
The EPCG scheme allows qualifying Indian manufacturers to import capital goods at 0% Basic Customs Duty, saving 7.5%–10% of CIF value on every shipment. Eligible businesses must fulfill an export obligation of 6× the duty saved within 6 years from the date of import.
Any manufacturer or service provider holding a valid IEC code and with an established track record of exports can apply. There is no minimum turnover threshold, though DGFT scrutinises the applicant's ability to meet the export obligation. Manufacturers in textiles, engineering goods, pharmaceuticals, and chemicals are the most frequent beneficiaries. Service exporters — including IT, hospitality, and healthcare services — are also eligible under the post-2021 FTP revisions.
The application is filed online through the DGFT portal. You submit your IEC, past export performance data, bank guarantee (typically 15% of duty saved), and a list of machinery to be imported. DGFT processes the application in 2–4 weeks. Once approved, you receive an EPCG authorization valid for 18 months for import. After import, you have 6 years to complete the export obligation, extendable by 2 years with a 2% composition fee.
High-volume machinery importers see the greatest absolute savings. An auto component manufacturer importing INR 5 crore of CNC machines saves roughly INR 37.5 lakh in BCD alone. Textile units importing 50+ looms annually, and pharmaceutical companies setting up new OSD facilities, routinely use EPCG. The scheme is less attractive for one-time importers because the compliance cost of tracking export obligations over 6 years can offset the duty saved. Read our detailed EPCG Scheme Guide for application templates and compliance checklists.
Sea freight is the default mode for capital goods over 500 kg due to lower cost and container availability, while air freight suits urgent spare parts and high-value precision instruments. Transit times range from 18–40 days by sea and 3–7 days by air.
| Mode | Best for | Cost | Transit | Typical examples |
|---|---|---|---|---|
| Sea freight (FCL) | Heavy machinery >500 kg | Lowest | 18–40 days from Asia/Europe | CNC machines, presses, generators |
| Sea freight (LCL) | Mid-weight equipment | Low | 20–45 days | Spare parts sets, small machines |
| Air freight | Urgent spare parts, high value/low weight | High (5–8× sea) | 3–7 days | PLC units, sensors, control panels, precision instruments |
Air freight for capital goods is justified in three scenarios: when a production line is down and a critical spare part is needed within 72 hours; when the item value exceeds $50,000 and the inventory carrying cost of a 30-day sea transit exceeds the air freight premium; or when the item is a prototype or sample where speed to market matters more than freight cost. For everything else — including full production machines, moulds, and large transformers — FCL sea freight remains the economical choice. We coordinate both modes and can split shipments, sending urgent spares by air and the main machine by sea.
Importing capital goods to India requires eight coordinated steps from HS classification to inland factory delivery. The complete process takes 4–8 weeks end-to-end, with customs clearance alone accounting for 7–15 business days at major Indian seaports such as JNPT and Chennai.
Step 1 is HS classification. We review technical specifications, brochures, and operating manuals to identify the correct 8-digit HS code under Chapter 84 or 85. Misclassification is the leading cause of customs disputes. A CNC lathe classified under a generic milling machine code can trigger a 2.5% duty difference and a penalty of 10–15% of assessable value. We verify every classification against the CBIC tariff and advance rulings database.
Step 2 checks EPCG eligibility. If you are a manufacturer with export history, we calculate the duty savings versus compliance burden. Step 3 is the DGFT application, which we prepare with your export data and machinery list. This takes 2–4 weeks. Without EPCG, you proceed directly to purchase order.
Step 4: place the purchase order with confirmed Incoterms — FOB or EXW for sea freight, EXW or DAP for air. Step 5: we book FCL flat-rack or standard container for heavy equipment, or air cargo for spares. Step 6: upon arrival, we file the Bill of Entry with the EPCG licence number if applicable. Customs examines high-value capital goods in 60–70% of cases. Step 7: duty is paid at the applicable rate. Step 8: we arrange inland transport with route surveys, crane hire, and escort vehicles for oversized cargo. Factory delivery typically occurs 3–7 days after port release.
Capital goods imports fail most often due to incorrect HS codes, missing valuation certificates for used machinery, unmonitored EPCG export obligations, or undeclared oversized cargo. Each error can cost INR 50,000–500,000 in demurrage, penalties, or delayed production lines.
Wrong HS code leads to re-assessment, differential duty demand, and penalty under Section 114A of the Customs Act. We have seen cases where a laser cutting machine was misclassified as a generic cutting tool, resulting in a 2.5% duty shortfall and a 15% penalty on a INR 80 lakh shipment. Fix: classify before shipping, obtain a binding advance ruling if the classification is ambiguous, and include the HS code in the purchase order so the supplier's invoice matches.
Used machinery shipments are held when the valuation certificate is missing, the machine exceeds the age limit, or the pre-shipment inspection report is incomplete. Indian customs requires a certificate from an approved valuer for all used machinery, and the machine must be less than 10 years old from year of manufacture. Certain categories, like medical equipment, have a 5-year age limit. Fix: commission the valuation and inspection report before the machine leaves the supplier's premises. We coordinate with inspection agencies in Germany, China, Japan, and the USA.
Unmonitored EPCG obligations lead to demand notices from DGFT after the 6-year period expires. The penalty is the full duty saved plus interest at 15% per annum. Fix: we maintain a quarterly EPCG tracker for our clients, matching export shipping bills against the obligation value. We file extension requests or composition fee payments 6 months before expiry to avoid last-minute liability.
Undeclared out-of-gauge (OOG) cargo cannot be discharged with standard port cranes, causing demurrage of INR 25,000–75,000 per day. The port may refuse discharge until a suitable crane is arranged. Fix: declare exact dimensions (length, width, height, weight, centre of gravity) at the time of booking. We arrange OOG slots, flat-rack containers, and inland route surveys before the vessel sails, ensuring the discharge plan is approved by the port and the transport route is cleared for wide loads.
India's major ports handle capital goods with varying specialisations — JNPT leads in volume for FCL from China and Europe, Chennai serves South India's manufacturing belt, and Mundra offers competitive rates for North India. Port selection affects both cost and inland transport time.
| Port | City | Strength |
|---|---|---|
| JNPT (Nhava Sheva) | Mumbai | Largest port, best for FCL from China/Europe |
| Chennai Port | Chennai | South India machinery imports |
| Mundra Port | Gujarat | North India, competitive rates |
| Kochi Port | Kochi | Kerala, south India |
| Vizag Port | Visakhapatnam | Heavy project cargo |
Choose JNPT if your supplier is in China, Germany, or Italy and you need frequent sailings with multiple carrier options. Choose Chennai if your factory is in Tamil Nadu, Karnataka, or Andhra Pradesh — the 350 km inland haul to Bengaluru is cheaper than the 1,200 km haul from Mumbai. Choose Mundra for factories in Gujarat, Rajasthan, or Haryana; Adani's terminal offers competitive handling charges and faster vessel turnaround. Vizag is the port of choice for heavy project cargo above 100 MT because its deeper draft and dedicated heavy-lift berth can handle oversized modules directly. We assess your supplier location, factory location, cargo dimensions, and delivery urgency before recommending a port.
Most machinery (Chapter 84, 85) attracts Basic Customs Duty (BCD) of 7.5%–10%, plus Social Welfare Surcharge (SWS) of 10% on BCD, and IGST at 18%. Total effective duty is typically 28–32% of CIF value. Manufacturers can import at 0% BCD under the EPCG scheme.
EPCG (Export Promotion Capital Goods) is a Government of India scheme that allows manufacturers and service exporters to import capital goods — machinery, equipment, jigs, fixtures, and spares — at 0% Basic Customs Duty. In exchange, the importer must fulfill an export obligation of 6× the duty saved, within 6 years.
Most capital goods do not require an import licence — they are on the "free" list under India's Foreign Trade Policy. However, second-hand/used machinery has specific conditions (typically must be less than 10 years old and have a third-party valuation certificate). Some specialised equipment may require DIPP or sectoral authority approval.
Yes, with conditions. Used machinery must generally be less than 10 years old (measured from year of manufacture), must have a certificate from a government-approved valuation agency, and must pass pre-shipment inspection. Certain categories have age limits of 5 years.
Heavy machinery customs clearance at Indian seaports typically takes 7–15 business days. This includes Bill of Entry filing, examination scheduling (physical examination is common for high-value capital goods), duty payment, and port release. Inland transport coordination adds 3–7 days for oversized cargo.
Most machinery falls under Chapter 84 (mechanical machinery) or Chapter 85 (electrical equipment). Common sub-headings: CNC machining centres (HS 8457), injection moulding machines (HS 8477), industrial robots (HS 8479), generators (HS 8502), transformers (HS 8504), motors (HS 8501). The HS code determines the exact BCD rate.
Capital goods are assets used in production — machinery, equipment, tools — and attract import duty on their CIF value. Raw materials and inputs are eligible for duty exemption or drawback schemes under Advance Authorisation or DFIA. The distinction affects which duty exemption schemes you can use.
Oversized capital goods are handled as project cargo. This requires: out-of-gauge (OOG) ocean freight booking on flat-rack or open-top containers, pre-shipment route survey at destination port, crane hire and rigging plan, police escort for wide-load transport. We coordinate all of this as your single freight and customs partner.