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.

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. For cases with AEO T1/T2/T3 status, a relaxation of 10% of the EO is available.

Key Features

  • 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
  • Transfer of EPCG licence allowed between group companies in some cases

Our EPCG Services

  1. Feasibility study — quantifying duty savings vs. export obligation feasibility
  2. Filing of EPCG application on DGFT portal with all required documents
  3. Registration of EPCG licence with Customs for duty-free import
  4. Installation certificate filing with Customs after machinery installation
  5. Monitoring of export obligation fulfilment and EOP status
  6. Filing of EOP extension applications if required
  7. EPCG licence redemption (closure) after EO fulfilment with EODC
  8. Handling EPCG-related scrutiny and audit by Customs and DGFT

Frequently Asked Questions – EPCG

Q: Can service sector companies use the EPCG scheme?

Yes. Service providers in sectors like hospitality, healthcare, education, and IT are eligible for EPCG scheme for import of capital goods required to provide services to foreign customers or to earn foreign exchange through service exports.

Q: What happens if I cannot fulfil the full export obligation under EPCG?

If you cannot fulfil the EO, you must pay proportional duty with 15% interest p.a. However, EO extension can be applied for, and there are provisions for regularisation. Samarth EXIM proactively monitors EO status and advises on timely action.

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Frequently Asked Questions

What is an IEC (Importer Exporter Code) and why is it mandatory in India?

An Importer Exporter Code (IEC) is a 10-digit identification number issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India. It is the primary business identification number required for any person or business engaged in import or export of goods and services.

IEC is mandatory because no import or export can be made without it (unless specifically exempted under the Foreign Trade Policy). It is required for Customs clearance, DGFT scheme applications, and receiving or making foreign trade payments through banks.

What are the main documents required for import-export in India?

Key documents for import-export operations in India include:

  • Shipping Bill (for exports) or Bill of Entry (for imports) — filed with Customs for clearance.
  • Commercial Invoice cum Packing List — details of goods, quantity, value, and packaging.
  • Bill of Lading / Air Waybill — transport document issued by the carrier.
  • Certificate of Origin (COO) — certifies the country of origin, needed for FTA benefits and some import requirements.
  • IEC Code — the importer/exporter identification number.
  • GST Invoice / LUT — for GST compliance on exports.
  • FSSAI Certificate — for food and agricultural imports.
  • BIS Certificate / NOC — for products under mandatory BIS certification.

What does DGFT do and why is it important for importers and exporters?

The Directorate General of Foreign Trade (DGFT) is the apex government body under the Ministry of Commerce and Industry responsible for formulating and implementing India's Foreign Trade Policy (FTP). Its key roles include:

  • Issuing and managing Importer Exporter Codes (IEC)
  • Administering export incentive schemes: Advance Authorisation, EPCG, RoDTEP, RoSCTL, SEIS
  • Granting export licences for restricted and SCOMET items
  • Issuing import licences for restricted items
  • Recognising Star Export Houses (status holders)
  • Fixing Standard Input Output Norms (SION)

Every Indian exporter and importer must interact with DGFT at some point — whether for obtaining an IEC, applying for export incentives, or seeking licences for restricted goods.

How can I find out if my product requires a special import licence in India?

India's import policy is classified under the ITC(HS) Classification of Export and Import Items published by DGFT. Every item has an import policy designation:

  • Free: Can be imported without any licence.
  • Restricted: Requires a specific import licence from DGFT before import.
  • Prohibited: Cannot be imported under any circumstances (e.g., beef in some categories).
  • Canalised: Can only be imported by government-designated agencies.

You can check the policy on the DGFT website by your ITC(HS) code, or contact Samarth EXIM for a free preliminary import policy check for your specific product.

What is the difference between Advance Authorisation and EPCG scheme?

Both are export promotion schemes under India's Foreign Trade Policy, but they serve different purposes:

  • Advance Authorisation (AA): Allows duty-free import of raw materials and inputs that are physically used in manufacturing export goods. The export obligation is the value of goods exported. Applicable before production.
  • EPCG (Export Promotion Capital Goods): Allows duty-free import of capital goods (machinery, equipment, tools) used in production of export goods. The export obligation is 6 times the duty saved, over 6 years.

They can be used together — EPCG for capital goods and Advance Authorisation for input materials — giving double duty savings on both machinery and raw materials.

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