EXPORT PROMOTION CAPITAL GOODS - EPCG SCHEME
EPCG stands for Export Promotion Capital Goods. The objective of this scheme is to facilitate the import of capital goods with the purpose of producing quality goods and services to enhance India’s export competitiveness. EPCG scheme allows import of capital goods for pre- production, production and post-production at zero customs duty.
The Export Promotion Capital Goods (EPCG) Scheme is an initiative under India’s Foreign Trade Policy (FTP) that allows exporters to import capital goods at zero customs duty, provided they fulfill an export obligation.
Key Features of EPCG Scheme:
- Duty-Free Import: Import of capital goods (machinery, equipment, tools, etc.) at zero customs duty for production of export goods.
- Export Obligation (EO):
- Specific EO: 6 times the duty saved amount to be fulfilled within 6 years from the authorization date.
- Average EO: Exporters must maintain the average level of exports made in the past 3 years.
- Eligibility:
- Any manufacturer exporter, merchant exporter tied to a supporting manufacturer, or service provider.
- Capital Goods Covered: Includes plant, machinery, and equipment (including computers and software) used for production.
- Domestic Sourcing Option: Capital goods can be procured domestically with applicable tax exemptions.
- Maintenance of Records: Exporters must maintain records and submit regular reports to the Directorate General of Foreign Trade (DGFT).
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Together We Learn, Together We Grow
Benefits of EPCG Scheme:
✔️ Reduces capital cost for exporters.
✔️ Enhances production capacity and competitiveness.
✔️ Supports expansion into international markets.
Frequently Asked Questions:
Q: What are the prerequisites for applying for EPCG?
Ans: To avail benefits under an EPCG scheme, following are required:
• Your user profile must be linked with an IEC.
• A valid DSC / e-sign must be registered in the system. You may verify the same from My Dashboard > View and Register Digital Signature Token.
• GSTN details corresponding to the branches of the IEC. The same may be added from Services > IEC Profile Management > Modify IEC.
• Valid RCMC details issued to the IEC.
Q: If my IEC is in DEL/cancelled/suspended, am I eligible to apply for the EPCG authorisation?
Ans: If your IEC is in DEL, you shall be allowed to proceed with submission of your request for issuance of an EPCG authorisation, however, your application shall only be actioned upon once your IEC is removed from DEL. If your IEC is cancelled/suspended, you shall not be allowed to proceed with submission of your request for the issuance of an EPCG authorisation.
Q: What is the export obligation under EPCG scheme? How is my export obligation calculated under the EPCG scheme?
the authorisation holder is obligated to complete:
- Annual average export obligation: The export obligation is over and above, the average levelof export achieved by you as an authorisation holder in the preceding three licensing years for the same and similar products within the overall export obligation period including the extended period (if any). Such average would be the arithmetic mean of export performance in the previous three years for the same and similar products.
- Specific export obligation: Specific export obligation is calculated as six times the duty saved amount. You must fulfill a minimum of 50% of export obligation in each block of years, i.e., the first block being the first 4 years and the second block is of the remaining 2 years.
Q: How is my export obligation period divided into blocks?
Ans: Export obligation period is defined for six years from the date of issuance of the authorisation. This six-year period is divided into two blocks, namely, the first block and the second block.
The first block period is for the first four years from the date of issuance of the authorisation. Whereas, the following two years are known to be the second block period of your authorisation.
Q: Is there any benefit in export obligation for green technology products?
Ans: As per foreign trade policy 2023, For exporters of Green Technology Products, Specific EO shall be 75% of EO as provided in the policy. There shall be no change in average EO imposed, if any.
Q: What Items are allowed for Import under the EPCG Scheme?
Ans: Capital Goods for the purpose of the EPCG scheme shall include:
- Capital goods as defined in Chapter 11
- Computer systems and software which are a part of the capital goods
- Spares, moulds, dies, jigs, fixtures, tools & refractories
- Catalysts for initial charge plus one subsequent charge
Imports under the EPCG authorisation shall be subject to an export obligation equivalent to six times the duties, taxes and cess saved on the capital goods, to be fulfilled in six years reckoned from the date of issuance of the authorisation.
EPCG authorisation shall be valid for imports for 18 months from the date of issuance of the authorisation.
Q: Is transfer of authorization possible for EPCG?
Ans: No, as per policy authorizations are non-transferable.