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What is Export Promotion Capital Goods Scheme (EPCG)?

The Export Promotion Capital Goods (EPCG) scheme allows the import of capital goods for pre-production, production and post-production at zero percent customs duty subject to an export obligation. In this blog, understand its benefits, documents required and how to apply for EPCG.
export promotion capital goods scheme
To increase and improve the manufacturing quality of Indian goods in international markets, the Export Promotion Capital Goods (EPCG) scheme was introduced. The scheme enables exporters to import capital goods that can be used to produce high-quality final products to be exported from India. Through EPCG scheme, exporters can export goods like spare parts for pre-production, production and post-production at zero customs duty1. The concessional 3% duty EPCG scheme allows the import of capital goods for pre-production, production and post-production at 3% customs duty, subject to an export obligation equivalent to 8 times the duty saved on capital goods imported under the EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue-date2.

Products under EPCG scheme

Following are some of the products that can be imported to India at zero customs duty under the EPCG scheme3:
• Plant, machinery, equipment or accessories required for manufacture or production
• Packaging machinery and equipment
• Refrigeration equipment
• Power generating sets
• Machine tools
• Equipment and instruments for testing, research and development, quality and pollution control
• Computer and software systems

To benefit from the EPCG scheme, it is mandatory to obtain a license by filling an application with Director General of Foreign Trade (DGFT).

Documents required to obtain an EPCG license

Some of the documents required to apply for EPCG scheme are:
Import Export Code (IEC)
• Two copies of ANF 5A duly filled in
Digital Signature Certificate (DSC)
• PAN
• Self-certified copy of valid RCMC from respective Export Promotion Council
• Consent letter of supporting manufacturer
• Self-certified copy and original certificate of Chartered Accountant
• Self-certified copy and original certificate of Chartered Engineer

How to apply online for an EPCG license?

An exporter can follow the below-mentioned process to apply for an EPCG license:
• Visit the official website of DGFT
• Under services, go to the EPCG page and click on apply for EPCG scheme.
• Log in using your credentials.
• Fill in the required details in the application and upload necessary documents.
• Make the required payment, if asked.
• Submit the application. The DGFT will issue an EPCG license after verification.

How to benefit from the EPCG scheme ?

1. Once you have received an EPCG license from DGFT, you must indicate the export items to be manufactured using the imported machinery or capital goods.
2. Then, register the license at customs or via ICEGATE.
3. You can import machinery or capital goods at import duty. Once installed, obtain an installation certificate for the machinery.
4. Submit it to the DGFT for an EODC (Export Obligation Discharge Certificate).
5. Submit EODC or closure letter to the customs department and redeem bank guarantee.

An EPCG license can benefit your business in the long run. The Government of India has introduced many schemes and incentives to assist exporters and accelerate export growth from India. With e-commerce exports programs, Indian exporters can grow their businesses and take their local products across the world with ease.

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Frequently Asked Questions

What is zero-duty EPCG scheme?
Zero-duty EPCG scheme allows import of capital goods for pre-production, production and post-production at zero% customs duty.
Which goods can be imported under EPCG scheme?
The scheme allows import of capital goods like spares, tools, machinery, fixtures, dies, moulds, etc.
What is not eligible under the EPCG scheme?
Some of the goods that are not permitted under EPCG scheme are captive plants, supply of electrical energy under deemed exports, supply of electrical transmission service, etc.
How do I surrender my EPCG License?
Some of the documents required to surrender EPCG license are shipping bill or bill of export, e-BRC (Electronic Bank Realization Certificate), statement of average exports, relevant forms and declarations.
Published on June 24, 2022.

Sources:
1. https://content.dgft.gov.in/Website/dgftprod/5ff3762d-94a4-48ac-a461-33e2b318613d/FTP%202021%20updated%20on%2026.3.21.pdf
2. https://www.startupindia.gov.in/content/sih/en/government-schemes/epcg.html
3. http://dgftcom.nic.in/dgftmumbai/html/trmum/fy13/Check%20Lists/Check%20List%20for%20Application%20of%20EPCG%20Authorisation.pdf
4. https://www.dgft.gov.in/CP/?opt=epcg
5. https://content.dgft.gov.in/Website/dgftprod/e17fcb62-c7e9-4e0b-b300-96023e72741f/DGFT%20FAQs%20-%20Export%20Promotion%20Capital%20Goods%20(EPCG)%20v1.0.pdf
6. https://www.meity.gov.in/writereaddata/files/EPCG_DEScheme.pdf
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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