Plant & Machinery Valuation in India

What "residual value" actually looks like over time

Two common depreciation shapes, illustrated — not a substitute for an inspection.

Illustrative only. Real residual value depends on condition, maintenance history, and market demand for that specific machine class — not age alone. This is not a valuation.

---

What is plant & machinery valuation?

An independent opinion of what industrial equipment, tools, or fleet assets are worth — as new-for-old, at depreciated replacement cost, or at market/distress value, depending entirely on the purpose. Unlike land, a machine actively wears out, gets superseded by newer models, and sometimes stops being made altogether, so the valuation has to account for physical condition, remaining useful life, and whether the technology itself is still current.

---

The rules, briefly

Importing used machinery

CBIC circulars (including 4/2008-Cus, 25/2015, and 07/2020-Customs) require an inspection/appraisement report — typically a Chartered Engineer's Certificate from the load port or place of sale — stating condition, year of manufacture, present value, and residual life. Under current Foreign Trade Policy, used capital goods are generally freely importable if under 10 years old with a certified residual life of 5 years or more; older or borderline equipment can fall into restricted categories needing a DGFT licence. Where no reliable transaction value exists, Customs falls back to Rule 9 of the Customs Valuation Rules.

Company-law and insolvency valuations

Under Section 247 of the Companies Act, 2013, machinery valuations for company-law purposes need a valuer registered with IBBI in the Plant & Machinery asset class — a separate registration from the Land & Building class Property Valuation uses. The same registration underpins insolvency and liquidation valuations under the IBC.

Machinery as loan security — a real difference from property

Property Valuation's SARFAESI page covers Rule 8/9 of the 2002 Enforcement Rules, which requires an approved valuer's report before immovable secured assets are auctioned. Movable secured assets — machinery included — sit under a different provision, Rule 5, which only requires an "estimated value" and is silent on mandating a registered valuer specifically. In practice, lenders still commission a proper valuation, but the statutory bar is lower for machinery than for land and buildings — worth knowing if a lender's own figure looks thin.

Accounting — Ind AS 16

Machinery held and used by a company sits under Ind AS 16 (Property, Plant and Equipment), which permits a revaluation model to fair value as an alternative to historical cost, alongside the impairment testing requirements of Ind AS 36. This is a different standard from Ind AS 40, which covers investment property specifically — see the Property Valuation page for that side of it.

EPCG and duty-linked schemes

Under the Export Promotion Capital Goods scheme, imported machinery gets a duty concession against an export obligation — and a Chartered Engineer's technical opinion is generally what establishes the "nexus" between the imported machine and the goods it's meant to help export. The same certification role shows up for duty drawback claims and EPCG-linked audits.

---

When you actually need one

---

Where the machinery actually sits

---

What a proper machinery valuation actually records

1. Purpose, valuation date, and basis of value
2. Make, model, serial number, and year of manufacture
3. Present physical condition and operating status
4. Residual life, with the reasoning behind that estimate
5. Original cost or CIF value in the year of manufacture, where relevant
6. Depreciation method applied and why
7. Photographs and, for imports, HSN/ITC-HS classification

---

Documents, by purpose

---

What separates a credible report from a rushed one

• For imports: the certifying engineer is DGFT-authorised, not just self-described as "chartered"
• Registration matches the Plant & Machinery asset class specifically, for IBBI-linked work
• Residual life is reasoned, not just asserted as a round number
• Physical inspection actually happened, or the desktop basis is clearly disclosed
• Depreciation method is named, not left implicit

---

Plant & machinery vs. the neighbours

---

Where a rushed machinery valuation goes wrong

• Age used as a proxy for condition, without an actual inspection
• An import certificate from someone without DGFT authorisation, risking customs rejection
• Wrong IBBI asset class registration for a company-law assignment
• Depreciation method left unstated, making the figure impossible to check

---

Glossary

Frequently Asked Questions

Explore Other Valuation Services