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EPCG (Export Promotion Capital Goods) Scheme

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The objective of scheme is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.

EPCG Scheme allows the import of capital goods at zero rate of customs duty, subject to precondition of export of goods produced with the help of imported goods, where an Importer has to undertake an export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods to be fulfilled in 6 years reckoned from date of Authorisation. If any holder of EPCG Auhtorisation is unable to meet the stipulated export obligation, the importer of the capital goods is required to pay custom duty saved along with interest on it at the rate prescribed.

EPCG Authorisation shall be valid for import for 18 months from the date of issue of Authorisation.

The capital goods allowed under EPCG Scheme shall be any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological up-gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, machine tools, equipment and instruments for testing, research and development, quality and pollution control, however it is hereby required to note that Authorisation under EPCG Scheme shall not be issued for Import of any capital goods for generating /transmission of power(including captive plants and power generator sets of any kind). The capital goods also include the Computer systems and software which are part of the capital goods being imported; Spare, molds, dies, jigs, fixtures, tools & refractories and Catalysts for initial charge plus one subsequent charge.

Capital goods may be use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture as well as for use in services sector.

EPCG intended for promoting exports and the Indian Government with help of this scheme offers incentives and financial support to the exporters.

EPCG Scheme covers the manufacturer exporters with or without supporting manufacturer(s), merchant exporter tied to supporting manufacturer(s) and service providers.

EPCG Authorisation is an actual user-based Authorisation, which means capital goods imported under the authorization cannot be transferred by the importer of capital goods before the export obligation is completed and export obligation discharge certificate is granted (EODC).

Export Obligation under the scheme shall be, over and above, the average level of exports achieved by applicant in the preceding three licensing years for the same and similar products within overall EO period including extended period, if any.

In order to obtain an Authorisation under EPCG Scheme, it is primary requirement to file an application with licensing authority of Director General of Foreign Trade. The application shall be attached with the required documents along with the company and personal details.

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