Import duty and GST in India - the landed-cost arithmetic every entrant gets wrong once

The stack: how a landed cost is actually built

India's import charge is a stack, not a number: Basic Customs Duty (BCD) on the assessable value, social welfare surcharge on the BCD, then IGST applied on the sum of value plus duties - and for some categories, compensation cess on top. The compounding matters: a product with 20% BCD and 18% IGST does not carry "38% tax" - the IGST applies after the duty, and the true landed multiplier is higher than intuition suggests. Every pricing decision downstream inherits this arithmetic, which is why the waterfall gets built first in our entry models.

Classification is strategy, not clerical work

Duty rates ride on HS classification, and plausible products often straddle codes with materially different rates. Classification also determines whether mandatory certifications apply and whether FTA preferences are available. Getting it right - defensibly, with rulings where stakes justify them - is commercial work: we have seen identical products land at duty rates several points apart on classification quality alone. Aggressive classification without defence invites reassessment and penalties; lazy classification donates margin.

FTA and CEPA preferences - margin left on the table

India's trade agreements - CEPA with Korea and Japan, agreements with ASEAN, Australia and the UAE - offer preferential duty rates for qualifying origin goods. Qualification requires origin criteria compliance and certificate discipline, and the origin question gets sharp for products assembled with third-country components. Brands that build origin documentation into their supply chain capture the preference every shipment; brands that treat it as optional paperwork pay standard rates and wonder why their landed cost loses to competitors. Your choice of India entry route also affects which entity bears the duty and who credits the IGST downstream - the structure and the tariff preference must be designed together.

GST after the border - registration, credits and cash flow

IGST paid at import is generally creditable once you are GST-registered and selling onward - meaning for a registered entity it is cash flow, not cost. But the structure decides everything: selling through a distributor who imports on their own account changes who bears and credits what; an importer-of-record structure changes it again. Working capital planning must include the GST cycle - credits arrive on the return calendar, not on the day the container clears.

The three pricing mistakes and the fix

Mistake one: pricing from home ex-factory logic plus a guessed "India tax" - the stack is knowable, so know it. Mistake two: ignoring preferences your origin already qualifies for. Mistake three: building the consumer price forward from landed cost instead of backward from the Indian price ladder - if the ladder will not carry your waterfall, the answer is pack architecture or supply chain redesign, not hope. In our entry framework this arithmetic is phase 4: the commercial model that decides whether the entry clears before anything is signed.