CAPITAL GOODS & CLOSURE
EPCG & EODC / Redemption
Support through your capital goods authorisation, export obligations and licence closure.
Discuss this requirement ↗EPCG Scheme (Export Promotion Capital Goods)
What is the EPCG Scheme?
The Export Promotion Capital Goods (EPCG) Scheme allows import of capital goods including machinery, equipment, spares, tools, and accessories required for pre-production, production, and post-production of export goods at zero customs duty. This is one of the most powerful schemes under India's Foreign Trade Policy as it enables manufacturers to upgrade their technology at zero import cost.
The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.
Export Obligation under EPCG:
In exchange for the duty concession, the EPCG Licence holder must fulfil an Export Obligation (EO) equal to 6 times the duty saved, to be completed within 6 years from the date of issuance of the Licence.
Incentive for early EO fulfillment:
With a view to accelerating exports, in cases where Authorisation holder has fulfilled 75% or more of specific export obligation and 100% of Average Export Obligation till date, if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned and the Authorisation redeemed by RA concerned.
Reduced EO for Green Technology Products:
For exporters of Green Technology Products, Specific EO shall be 75% of EO as stipulated in Para 5.01(b). There shall be no change in average EO imposed, if any, as stipulated in Para 5.04(c). The list of Green Technology Products is given in Para 5.26 of HBP
Reduced EO for North East Region and UTs of Jammu & Kashmir and Ladakh.:
For manufacturing units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir and Ladakh, specific EO shall be 25% of the EO, as stipulated in Para 5.01(b). There shall be no change in average EO imposed, if any, as stipulated in Para 5.04(c).
Exemption from maintenance of average export obligation:
In case of export of goods relating to the following, the EPCG Authorisation holder shall not be required to maintain average export obligation. (i) Handicrafts, (ii) Handlooms, (iii) Industries covered under Khadi and Village Industries Commission (KVIC) (iv) Agriculture (v) Aquaculture (including Fisheries),Pisciculture, (vi) Animal husbandry and Dairying, (vii) Floriculture & Horticulture, (viii) Poultry, (ix) Viticulture, (x) Sericulture, (xi) Carpets, (xii) Coir, and (xiii) Jute
However, this exemption from maintenance of average export obligation shall not be allowed for import of fishing trawlers, boats, ships and other similar items
Goods, excepting tools imported under EPCG scheme by sectors specified in sub-paragraph (a) above, shall not be allowed to be transferred for a period of five years from date of imports even in cases where export obligation has been fulfilled.
Fulfilment of Export obligation as per following proportions:
| Period from the date of issue of Authorisation | Minimum export Obligation to be fulfilled |
|---|---|
| Block of 1st and 4th year | 50% |
| Block of 5th and 6th year | Balance EO |
Key features and benefits:
Zero Basic Customs Duty and IGST on import of capital goods
Export obligation: 6x the duty saved over 6 years (specific conditions apply)
Capital goods can be second-hand/refurbished (subject to conditions)
Pre-production, production, and post-production capital goods all covered
Exports under Advance Authorisation, DFIA, Duty Drawback, RoSCTL and RoDTEP Schemes would also be eligible for fulfilment of EO under EPCG Scheme.
Scope of services:-
Preparing application as per data received.
Online filing
Filing suitable replies for any clarification sought by DGFT
If required we can also undertake clearance of Capital goods from Custom Authorities.
Arranging Documents for proof of installation to Jt. DGFT and Customs.
Prescrutiny of Export Invoice before presentation to Customs.
Filing of report to Jt. DGFT on progress made in fulfillment of Export obligation against EPCG Licence on annual basis.
Applying for Extension of Export obligation if required. Filing annual return etc.,
Applying for closure / redemption of file after completion of Export.
YOUR QUESTIONS
Frequently asked questions
Export Promotion Capital Goods Scheme (EPCG)
Q1. What is the EPCG Scheme?
The Export Promotion Capital Goods (EPCG) Scheme allows import of capital goods including machinery, equipment, spares, tools, and accessories required for pre-production, production, and post-production of export goods at zero customs duty. This is one of the most powerful schemes under India's Foreign Trade Policy as it enables manufacturers to upgrade their technology at zero import cost.
The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.
Q2. Who can benefit from the EPCG Scheme?
Manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service provider(s); and service providers. Refer FTP and HBP for latest details.
Q3. What is the export obligation under EPCG scheme?
How is my export obligation calculated under the EPCG scheme?
OR What are the conditions to be fulfilled under the EPCG scheme?
Refer FTP and HBP for latest details. Export obligation under the EPCG scheme is required to be fulfilled by export of goods/services rendered by you. There are two types of export obligation which the authorisation holder is obligated to complete:
• Annual average export obligation:
The export obligation is over and above, the average level of 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.
Q4. What is first block period? OR What is second block period? OR How is my export obligation period divided into blocks?
My 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.
Q5. Is there any exemption from maintenance of Annual average export obligation? OR
Am I eligible for an exemption from maintenance of Annual average export obligation? OR How can I avail the benefit for exemption from the maintenance of Annual average export obligation?
In case of export of goods relating to specific sectors as specified in the HBP 2014-19 para 5.13(a), exemption from maintenance of annual average export obligation may be provided to you.
To avail this benefit, please mention your sector of export under the field, Are the export item(s) present in the following list in your application for the issuance of an EPCG/Post export EPCG authorisation.
Q6. Am I eligible for a reduction in my specific export obligation? OR
How can I avail the benefit for reduction in my specific export obligation?
The specific export obligation may be reduced for the EPCG authorisation holder, in the following cases:
| Sr. No | Case | Exemption Provided |
|---|---|---|
| 1 | In cases, where you have completed 75% or more of specific export obligation and 100% of average export obligation till date (if any), in half or less than half of the original export obligation period specified. | Remaining export obligation shall be condoned and the authorisation be redeemed by the RA concerned |
| 2 | For exporters of Green Technology Products | Specific EO shall be 75% of the EO |
| 3 | For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu and Kashmir | Specific EO shall be 25% of the EO |
Only one of the above benefits may be provided to you. The intension for the same may be shown while applying for the issuance of the authorisation, if applicable. Also, while applying for issuance of the authorisation, the same may be indicated in the field of Sector Classification of Capital Goods sought to be imported field.
Q7. What items are allowed for import under the EPCG scheme?
Capital Goods for the purpose of the EPCG scheme shall include:
• Capital goods as defined in Chapter 9
• 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
Q8. How do I fulfill export obligation under EPCG?
You can export either directly or through third party(s). Export proceeds are to be realized in freely convertible currency except for deemed exports. Import of capital goods imported under the EPCG scheme shall be subject to Actual user condition, until the export obligation is completed.
For applicable policy, forms and current requirements: DGFT Foreign Trade Policy · DGFT application help. Eligibility and filing requirements are assessed for the relevant transaction and policy period.
LET’S DISCUSS YOUR REQUIREMENT
Practical advice starts
with a conversation.
Speak with Rajiv Manek about your business and the next step.