Many thanks to your replies. I think I need to clarify a few points.
First to Crosswind, no, it not illegal and that is not the advice I am looking for. I have already been offered illegal methods by various touts to do this but I am not interested in that. I have written to the Carnet issuing authority and they have given me official confirmation that they have 'no objection' to registering the vehicle here upon payment of the necessary levies.
Then to Priyanka: First and foremost, this vehicle was indeed bought with my hard earned money earned abroad and has been my loving car which is now 9 years old. It has sentimental values to me so I hate to part with it. Customs have quoted me over 4 million in taxes which I am willing pay, so this is certainly not a cheap method of obtaining a car. People are too quick to jump the gun and to assume that everyone is trying to do something illegal or use a short cut. Also, this is not a luxury car and even if it was, I would have to pay an additional luxury tax on top too.
But as Priyanka mentioned, there is apparently a large scale racket where people bring down vehicles on Carnets and get a local plate using illegal methods thereby cheating on the revenue due to the state. But I am seeking permission to PAY the relevant levies applicable and keep the vehicle and not to go through the illegal touts. But this seems to be a grey area and my application is being ball-passed from one authority to another: Customs, Import Controller, RMV etc. Yet no one has declined my request. That is why I approached this forum to find out if anyone could throw some light.
I will update the forum if I hear any news.