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How to Calculate the Landed Cost of an Import into India (Step by Step)
By Abhishek Sadashiv · 16 years of experience in global logistics · Updated 29 September 2026 · 7 min read
The price on your supplier's invoice is not what the goods cost you. By the time they reach your warehouse, you have paid freight, insurance, customs duty, IGST, clearing charges and transport. Importers who price their products on the invoice value alone often find their margin gone.
Landed cost is the total cost of getting goods to your door. This guide works through a real-style example, step by step.
Landed cost calculation example
You import 500 units from China on FOB terms:
| Item | Value |
|---|---|
| FOB invoice value | USD 10,000 |
| Sea freight to Nhava Sheva | USD 800 |
| Insurance | not known |
| Exchange rate (CBIC import rate) | ₹85 per USD |
| BCD on this product | 10% |
| IGST on this product | 18% |
Step 1: Work out the CIF value
Landed cost calculation for any import into India starts with the customs value. Indian customs values goods on a CIF basis (cost + insurance + freight). On FOB terms you add freight and insurance yourself.
If insurance is not known, customs takes it as 1.125% of FOB. If freight is not known, it is taken as 20% of FOB.
| USD | |
|---|---|
| FOB | 10,000.00 |
| Freight | 800.00 |
| Insurance (1.125% of FOB) | 112.50 |
| CIF | 10,912.50 |
Step 2: Convert to rupees: the assessable value
Use the CBIC notified import exchange rate for the date the Bill of Entry is filed, not your bank's rate.
USD 10,912.50 × ₹85 = ₹9,27,563. This is the assessable value, the base for all duty.
Step 3: Calculate customs duty and IGST
| Layer | Calculation | Amount |
|---|---|---|
| Basic Customs Duty (BCD) | 10% of ₹9,27,563 | ₹92,756 |
| Social Welfare Surcharge (SWS) | 10% of BCD | ₹9,276 |
| IGST | 18% of (₹9,27,563 + ₹92,756 + ₹9,276) = 18% of ₹10,29,594 | ₹1,85,327 |
| Total paid at customs | ₹2,87,359 |
Notice that IGST is charged on the value plus the duties, not on the invoice value alone. Some products also carry AIDC, compensation cess or anti-dumping duty; add them in the same way.
Step 4: Add clearing and delivery costs
| Cost | Typical amount (example) |
|---|---|
| CHA / clearing charges | ₹12,000 |
| Port, CFS or terminal charges | ₹15,000 |
| Shipping line / delivery order charges | ₹10,000 |
| Transport to your warehouse | ₹15,000 |
These vary a lot by port, container size and CHA, so ask for quotes. Watch out for demurrage and detention, which start once the free days run out and can quickly exceed all other charges.
Step 5: Separate what you can claim back
If you are GST-registered and use the goods for business, the IGST paid at customs is usually claimable as input tax credit. It affects your cash flow, but it is not a final cost. BCD and SWS are real costs.
| Amount | |
|---|---|
| Assessable value | ₹9,27,563 |
| BCD + SWS | ₹1,02,032 |
| Clearing and delivery | ₹52,000 |
| Landed cost (excluding claimable IGST) | ₹10,81,595 |
| Per unit (500 units) | ₹2,163 |
The invoice said USD 20 per unit, or ₹1,700. The real cost is ₹2,163, about 27% more. Your cash outlay is higher still until you claim the IGST credit.
Common mistakes
- Using the bank's exchange rate instead of the CBIC notified rate.
- Calculating IGST on the invoice value instead of value plus duties.
- Forgetting SWS or cesses that apply to your product.
- Leaving out demurrage risk when the Bill of Entry or documents are late.
- Using the wrong HS code, which changes every number above.
Calculate the landed cost of your own import
Try the free landed cost calculator and import duty calculator, or upload a product photo to EximSetu to get the correct HS code and duty rates first.
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16 years of experience in global logistics
Built EximSetu after 16 years in global logistics, watching shipments get held, reassessed or delayed because of a wrong HS code or a missed compliance step. Every guide here is written from that experience, for the people who actually move cargo.
Frequently asked questions
▸What is landed cost in import?
Landed cost is the total cost of getting imported goods to your warehouse: the goods, freight, insurance, customs duty, clearing charges and inland transport.
▸Is IGST part of landed cost?
If you are GST-registered and use the goods for business, IGST paid at customs is usually claimable as input tax credit, so it affects cash flow but is not a final cost.
▸What value is customs duty calculated on in India?
On the assessable value, which is normally the CIF value converted to rupees at the CBIC notified import exchange rate.
▸What if I don't know the freight or insurance cost?
Customs takes unknown insurance as 1.125% of FOB and unknown freight as 20% of FOB when calculating the assessable value.
More guides
This guide is general information, not legal advice. Rules and rates change; always confirm for your exact product with your customs broker or the official notification.