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Because of the relatively high import duties in India, it is important to know the position of your Indian distributor/importer. Suppose your product costs 100 euros (Free On Board, FOB). For the importer, transport and shipping insurance and import duties add about 30% on average. Note that import duties are calculated on the basis of Cost, Insurance, and Freight (CIF) + 1%. In this example, your Indian importer will easily spend about 140 euros before he has the goods in storage. Keep that in mind during the negotiations.

The import duties you have to pay depend on your product group (HS code). On average, import duties are 26 to 30%. For alcohol, chocolate, tobacco, dairy products and luxury products such as assembled cars, this is considerably higher. For many medical products, import duties are actually lower. Do you have the Indian government or a 5-star hotel as a customer? Then there are no import duties.

The Goods and Services Tax (GST) is India's version of VAT. There are five rates, ranging from 0% to 28%, under which 1211 categories of goods and services are divided. Under the GST system, tax is levied at any time value is added to the product and a sale is made. This runs up to the final sale to the customer. You can read how the Goods and Services Tax is levied and whether you have to pay it here.

Simply put, a Special Economic Zone (SEZ) is an industrial zone with a favorable tax environment. If you settle in an SEZ, you pay no income tax for the first five years and only 50% of your income thereafter. Also, companies in SEZs are exempt from paying sales tax (GST)and do not have to pay Basic Custom Duty (30% on average in India). It can be very beneficial for you to set up in an SEZ, but it depends entirely on your product, your goals and where your customer base is located. Before you decide to establish yourself in an SEZ, it is therefore important to do thorough market research. Our local experts can always support you with this. Read more about our market research and analysis here.