Project Imports Scheme

What is the Project Import Scheme under Chapter 98?

The Project Import Scheme, covered under Chapter 98 of the Customs Tariff Act, 1975, allows importers to bring in capital goods, machinery, and equipment for projects (like power, irrigation, mining, oil exploration, and industrial plants) at a concessional customs duty rate under Heading 9801.

Who can avail the Project Import Scheme?

Project Import benefits are available to industrial units setting up or expanding projects in sectors such as power generation, fertilizers, oil and gas, mining, irrigation, renewable energy, and manufacturing plants.

What goods are covered under Project Import?

The scheme covers capital goods, machinery, instruments, spares, pipes, and equipment required for the initial setting up or substantial expansion of an approved project. Construction equipment may also be allowed if it forms part of the project.

What is the procedure to register under Project Import?

Importers must register the project with the Customs House at the port of import, submit a Project Report, contracts, approvals, and a bond with bank guarantee. Registration is mandatory before clearance of goods.

What is the concessional duty benefit under Project Import?

All approved goods falling under the scheme are assessed under Customs Tariff Heading 9801 at a concessional duty rate (instead of the individual tariff rates of the goods).

Is there any export obligation under Project Import?

No , unlike EPCG or Advance Authorisation, the Project Import Scheme does not impose export obligation. It is a duty concession scheme for setting up or expanding industrial projects in India. Common Challenges in Project Import Scheme

❌ Complex Registration Process – Delays in registering contracts at Customs before first import.
❌ Classification Issues – Disputes over whether certain goods qualify as project imports.
❌ Procedural Delays – Requirement of multiple clearances from Ministries, DGFT, or sponsoring authorities.
❌ Contract Splitting – Multiple suppliers and contracts lead to complications in registration and assessment.
❌ Post-Import Audit by Customs – Verification of end-use of machinery and project compliance often causes delays.
❌ Bank Guarantee & Bond Requirements – Financial burden for SMEs and new project promoters.
❌ Litigation Risks – Many cases arise due to interpretation of “eligible goods” under Chapter 98.

Why Project Imports?

In large-scale industrial projects, diverse machinery, components, and equipment are imported in phases. Without the Project Imports Scheme, each item would need individual tariff classification and valuation, leading to:

Delays in customs clearance
Higher demurrage charges
Complex valuation disputes

Goods Allowed under Project Imports

All items of machinery, including:
- Prime movers
- Instruments & appliances
- Control gear and transmission equipment
- Auxiliary equipment (including for R&D, testing, quality control)
Components & raw materials for manufacturing machinery
Spare parts, consumables, and semi-finished materials up to 10% of project value

Projects Eligible under the Scheme The following project categories are eligible for benefits under CTH 98.01:

Industrial Plants
Irrigation Projects
Power Projects
Mining Projects
Oil & Mineral Exploration Projects
Other notified projects in the Official Gazette

Projects/Goods Not Eligible

Hotels, hospitals, photographic studios, photocopying units, laundries, garages, and workshops
Single or composite machines

Import of Construction Equipment – Following the Supreme Court ruling in Toyo Engineering India Ltd., construction equipment essential for setting up or expanding a registered project is eligible under CTH 98.01. How Sohamma Helps You:

Registration of Projects –
Industrial licence & IEC

Recommendatory letter from sponsoring authority
Bond & bank guarantee
Detailed project report & technical specifications
Amendment of Contracts
We handle procedural compliance for changes in contracts post-registration.
Customs Clearance Post-Registration
Finalisation / Closure of Contract

Submission of reconciliation statements
Plant Site Verification compliance
Closure of provisional assessments

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