EPCG Scheme for Hotels: Unlocking Duty-Free Imports for Hospitality Excellence

The Indian government’s Export Promotion Capital Goods (EPCG) Scheme, typically aimed at manufacturing exporters, has a unique and powerful application in the hospitality sector. For hotels serving foreign guests, the EPCG scheme allows customs duty exemption on specific imported capital goods, treating services rendered to foreign nationals as exports.

At Commercial Consultancy Counsel (CCC), we guide hotels across India through this

transformative opportunity. This blog breaks down EPCG for hotels, eligibility criteria, compliance expectations, and the list of items permitted or restricted under the scheme

What is the EPCG Scheme?

The EPCG Scheme under Chapter 5 of the Foreign Trade Policy 2023 (FTP) enables businesses to import capital goods duty-free, provided they meet an export obligation (EO). For hotels, services provided to foreign passport holders when paid for in foreign exchange or through international cards qualify as exports.

This translates to a significant cost advantage for hotels importing high-value infrastructure, machinery, or equipment.

What can be imported under the EPCG Scheme?

As per provision 5.01(a) the following can be imported under the EPCG Scheme:

(i) Capital Goods

(ii) Computer systems and software which are a part of the capital goods being imported

(iii) Spares, moulds, dies, jigs, fixtures, tools and refractories; and

(iv) Catalysts for initial charge and one subsequent charge.

What is Capital Good under the FTP?

As per provision 11.08 of the FTP ‘Capital Goods’ are defined as “Capital Goods means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological up-gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in the services sector.

What Can Be Imported Under EPCG by Hotels?

According to Appendix 5F of FTP 2023, hotels are allowed to import a wide range of items which usually do not fall under the allowed capital goods list under the EPCG Scheme. These items fall under ‘Negative List’ category and are only permitted to be imported for the Hotel Industry. Examples include:

Permitted for Hotels:

• Furniture, carpets, crockery, chandeliers, flooring materials

• Tiles, doors, fixing panels (when used as part of interiors)

Why Should Hotels Explore the EPCG Scheme?

Hotels spend crores annually on:

• Kitchen and laundry equipment

• Furnishings and interiors

• Spa and gym setups

The EPCG Scheme allows duty-free import of these items if the hotel commits to achieving exports equivalent to 6 times the duty saved within 6 years. This results in:

• Reduced capital investment

• Improved guest experience through modernized infrastructure

• Competitive pricing for luxury services

How CCC Can Help Your Hotel

At Commercial Consultancy Counsel, we specialise in:

• Eligibility Assessment and DGFT classification

• Drafting and Filing EPCG license applications

• Guidance on recordkeeping and guest documentation

• EO tracking dashboards tailored to hotel operations

• Closure assistance and EO redemption

Conclusion

If your hotel regularly caters to foreign guests, the EPCG scheme is an opportunity you should not overlook. With CCC as your EPCG compliance partner, you can unlock substantial cost savings, upgrade your infrastructure, and ensure

full legal and procedural adherence.