DGFT Relaxes EPCG Export Obligation Norms — Relief for Capital Goods Importers

EPCG Scheme: Major Relaxations Benefit Exporters Facing Export Obligation Challenges

The Directorate General of Foreign Trade (DGFT) has issued a Policy Circular amending the Export Promotion Capital Goods (EPCG) Scheme under the Foreign Trade Policy 2023. These amendments provide significant relief to exporters who imported capital goods under EPCG but have faced difficulties fulfilling their export obligations (EO) due to market conditions, supply chain disruptions, or demand fluctuations.

Key Relaxations Notified

• EO Period Extension: The standard 6-year EO fulfillment period can be extended by an additional 2 years on payment of a composition fee, without needing to furnish bank guarantees afresh. This is subject to the EPCG authorisation being in a valid period and EO not having lapsed.
• Composition of EO: Exporters who are unable to fulfill EO due to genuine hardship may opt for a one-time composition by paying 3% of the unfulfilled CIF value of capital goods imported under EPCG, in lieu of customs duty with interest.
• Specific Manufacturing Facility Flexibility: EO can now be fulfilled across multiple plants/units within the same corporate group, subject to declaration at the time of authorisation issuance.
• Maintenance of Average EO: The definition of 'Average EO' has been revised to exclude COVID-19 disruption years (2020-21 and 2021-22) for calculating the 3-year average, benefiting exporters whose base exports were impacted.

Action Required for EPCG Authorisation Holders

EPCG authorisation holders who are nearing their EO deadline or struggling to meet export targets should review their position and explore available options. Samarth EXIM provides EPCG EO monitoring, extension applications, and redemption closure assistance.