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March 31, 2001
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India allows conditional used-car imports


India announced it would ban import of second-hand vehicles older than three years as part of a move to protect the domestic automobile industry under new looser trade rules announced on Saturday.

India lifted quantitative import restrictions on more than 700 products ranging from automobiles to textiles as it opened its markets to global trade to comply with a World Trade Organisation ruling.

Commerce and Industry Minister Murasoli Maran said imported vehicles would have to conform to India's Motor Vehicles Act of 1988.

Left-hand drive vehicles have been banned and second-hand vehicles must have a residual life of at least five years.

Importers must also guarantee supply of spares and service facilities during this period.

To ensure compliance with these conditions the policy makes inspection of vehicles compulsory before and after shipment.

Until now, India did not allow vehicle imports except under licence. Domestic car makers had feared a flood of imports after the loosening of restrictions and had been lobbying for such protection.

Several global car companies including General Motors, Ford, Hyundai, Daewoo and Suzuki have made large investments in India to set up manufacturing facilities.

Import of new vehicles will also be allowed only through the country of manufacture and all imports can only be carried out through the Bombay port located on India's western coast, the policy added.

In February, the Union Budget for 2001-02 increased basic customs duty on second hand cars to 105 per cent, pushing effective duty on them to over 180 per cent.

New cars bear a basic import duty of 35 per cent, resulting in an effective duty to 85.33 per cent.

Exim Policy 2001-2002: Full coverage
Union Budget 2001-2002: Full coverage

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