The Export Promotion Capital Goods (EPCG) Scheme is a pivotal initiative under Chapter 5 of the Foreign Trade Policy (FTP).
It aims to enhance India's manufacturing competitiveness by allowing the import of capital goods at zero customs duty.
This comprehensive guide explores the objectives, issuance, redemption, and key aspects of the EPCG scheme, helping exporters understand how to leverage it for their benefit.
Export Promotion Capital Goods (EPCG) Scheme
Who are eligible to apply for EPCG Scheme?
Manufacturer Exporter with or without supporting manufacturer;
Merchant exporter tied to supporting manufacturer;
Service providers.
What are the benefits of availing EPCG Authorization?
Duty Free Import of technologically advanced Capital Goods
Manufacturing of world class finished goods
Generation of Foreign Exchange by export of finished goods
What is the export obligation under EPCG Scheme?
1. Average Export Obligation
It is endorsed on the Licence at the time of issuance of licence and it is calculated as average of exports made in preceding three years and it has to be maintained for every year starting from the date of issuance of licence till the completion of specific export obligation.
2. Specific Export Obligation
It is 6 times of duties saved value of the capital goods as
endorsed in the EPCG licence and this export obligation needs to be fulfilled in 6 years.
It is an authorization / licence issued for duty-free import of world class capital goods for pre-production, production, and post-production.
What is EPCG Authorization /Licence?
Objective of the EPCG Scheme is to facilitate the import of Capital goods for producing quality goods and enhances India’s manufacturing competitiveness.
What are the objectives of EPCG Scheme?
For Import purpose, an EPCG Authorization is valid for 24 months from the date of authorization and validity for the purpose of Exports is 6 Years from the date of Authorization.
What is the validity of EPCG Authorization for Imports and Exports?
Application for grant of EPCG Authorization can be made to the concerned Regional office of the DGFT in Form ANF 5A along with prescribed documents.
What is the process for availing EPCG Authorization
An Installation Certificate is a document issued/obtained from the Jurisdictional Customs Authority or an Independent Chartered Engineer confirming the installation of the capital goods at factory/premises of the Authorisation Holder.
Installation Certificate has to be submitted to the concerned Regional Office within 3 years from the date of completion of import as per Para 5.04(a) of the HBP 2023.
What is Installation Certificate under EPCG?
EPCG authorisation holders must submit a report on EO fulfilment in place of annual reporting to the concerned Regional Authority after the expiry of the first four-year block period and continuously until the valid EO period ends. The report must contain details of shipping bills, invoices, bills of export, and foreign inward remittance certificates, duly certified by a Chartered Accountant, Cost Accountant, or Company Secretary, evidencing fulfilment of specific and average EO, wherever applicable.
What is Annual Reporting under EPCG Scheme?
Once the export obligation period of 6 years is over, the authorization holder has to apply for grant of Export Obligation Discharge Certificate (EODC). This document viz. the EODC is a proof that all the obligations have been fulfilled and the exporter is discharged from the obligations of the EPCG Authorization
What is EODC under EPCG Scheme?
Upon completion of export obligation, the authorization Holder should file the application for EODC in Form ANF 5B along with prescribed documents. On receipt of application, the concerned Regional
Authority (RA) process the same and in case, any additional information / documents are required, they point out the same and communicate to the Authorization Holder. Once RA is satisfied with all the documents, EODC is issued.
How to apply for EODC under EPCG Scheme?
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