Introduction

Scheme is a scheme launched by DGFT in the Foreign Trade Policy 2015-2020 under chapter 4. The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhancing India’s manufacturing competitiveness.

EPCG Scheme allows import of capital goods for pre-production, production and post-production at 0% customs duty.

 

Capital goods for the purpose of the EPCG :

• Capital Goods as defined in Chapter 9 of FTP 2015-2020 including in Completely Knocked Down/Semi Knocked Down condition thereof;

• Computer systems and software which are a part of the Capital Goods being imported;

• Spares, moulds, dies, jigs, fixtures, tools & refractories; and

• Catalysts for initial charge plus one subsequent charge.

 

Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme.

Export Obligation (EO):

Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.

Following conditions shall apply to the fulfilment of EO:

• EO shall be fulfilled by the authorisation holder through export of goods which are manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted.

• Deemed Exports  shall also be counted towards fulfillment of export obligation, along with usual benefits available for deemed exports.

• Authorisation shall be valid for import for 18 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted.

The Authorisation holder under the EPCG scheme shall, while maintaining the average export obligation, fulfill the specific export obligation over the prescribed block period in the following proportions:

Period from the date of issue of Authorisation	Minimum export obligation to be fulfilled
Block of 1st to 4th year	50%
Block of 5th and 6th year	Balance EO

 

Coverage  

EPCG scheme covers

• Manufacturer exporters with or without supporting manufacturer(s),
• Merchant exporters tied to supporting manufacturer(s) and service providers.
• Name of supporting manufacturer(s) shall be endorsed on the EPCG Authorisation before installation of the capital goods in the factory / premises of the supporting manufacturer (s).

• Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is designated / certified as a Common Service Provider (CSP) by the DGFT, Department of Commerce or State Industrial Infrastructural Corporation in a Town of Export Excellence subject to provisions and conditions of Foreign Trade Policy 2015-2020.

Indigenous Sourcing of Capital Goods

• A person holding an EPCG authorisation may source capital goods from a domestic manufacturer.
• Such domestic manufacturer shall be eligible for deemed export benefits under Chapter 7 of FTP 2015-2020.
• Such domestic sourcing shall also be permitted from Export Oriented Units.

Reduced EO for Green Technology Products  

For exporters of Green Technology Products, Specific EO shall be 75% of EO.

Reduced EO for North East Region and Jammu & Kashmir 

For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu & Kashmir, specific EO shall be 25% of the EO.