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EPCG Scheme: Full Form, Benefits and How to Apply
EPCG (Export Promotion Capital Goods) Scheme allows to import capital goods for manufacturing. Know the epcg benefits and steps to apply.
May 30, 2026 | 5 min read
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The Export Promotion Capital Goods (EPCG) scheme is a Government of India initiative administered by the DGFT that enables duty-free imports of capital goods for Indian exporters. Governed under the Foreign Trade Policy (FTP), the scheme lowers the upfront cost of machinery and equipment needed for export production. It is accessible to manufacturers, merchant exporters, and service providers and is designed to strengthen India's manufacturing competitiveness in global markets.1
What is the EPCG scheme?
The EPCG (Export Promotion Capital Goods) scheme enables Indian exporters to import capital goods at zero customs duty. Administered by the DGFT under the Foreign Trade Policy (FTP), it covers manufacturers, merchant exporters, and service providers. First established in 1992, the scheme was most recently updated under FTP 2023.2
The EPCG scheme operates on a zero-duty basis. You can import capital goods at zero customs duty, with an EPCG export obligation of six times the duty saved, fulfilled within six years of authorization.3 Earlier versions of the FTP included a concessional 3% duty variant with an export obligation of eight times the duty saved over eight years.4 This variant is no longer applicable under FTP 2023.
How it works:
- Apply for an EPCG license on the DGFT portal.
- Import approved capital goods at zero or concessional duty.
- Use the imported machinery for export production.
- Fulfill the export obligation within the stipulated period to close the authorization.
The EPCG scheme operates on a zero-duty basis. You can import capital goods at zero customs duty, with an EPCG export obligation of six times the duty saved, fulfilled within six years of authorization.3 Earlier versions of the FTP included a concessional 3% duty variant with an export obligation of eight times the duty saved over eight years.4 This variant is no longer applicable under FTP 2023.
How it works:
- Apply for an EPCG license on the DGFT portal.
- Import approved capital goods at zero or concessional duty.
- Use the imported machinery for export production.
- Fulfill the export obligation within the stipulated period to close the authorization.
Pro tip
For duty relief on raw material imports, the Advance Authorization Scheme for exporters is a complementary option worth exploring.
What is EPCG full form?
The EPCG full form is Export Promotion Capital Goods, a name that directly reflects the scheme's purpose: promoting India's exports by making capital goods more accessible.
The DGFT, which functions under the Ministry of Commerce and Industry, administers the scheme through its network of regional offices across India. It derives its legal framework from Chapter 5 of the Foreign Trade Policy, which outlines eligibility, authorization procedures, and export obligation conditions.
The DGFT, which functions under the Ministry of Commerce and Industry, administers the scheme through its network of regional offices across India. It derives its legal framework from Chapter 5 of the Foreign Trade Policy, which outlines eligibility, authorization procedures, and export obligation conditions.
EPCG scheme benefits for Indian exporters
Some common benefits of the scheme are:
1. Zero customs duty on capital goods
The EPCG scheme allows you to import machinery, tools, and equipment without paying customs duty upfront. For most capital goods, basic customs duty can add significantly to your import cost. Eliminating that duty frees up capital that can go directly back into production. Sectors like textiles, pharmaceuticals, and auto components use this to modernize production lines and reduce unit costs.
2. Technological upgradation
Duty-free access to advanced machinery lets you upgrade production without the burden of import costs. This helps you meet buyer specifications and quality certifications required in markets like the EU and the United States. For electronics, gem, and jewelry exporters, where precision equipment is non-negotiable, this can be a decisive advantage.
3. Import of second-hand capital goods
The EPCG scheme permits the import of second-hand capital goods with no age restriction. A functionally used machine can cost half the value of a new equivalent. This gives MSMEs and smaller exporters a practical, lower-cost way to access the same production capability without stretching their capital budgets.
4. Stronger manufacturing competitiveness
Lower equipment costs translate directly into lower per-unit production costs. This gives you room to price competitively in international markets without compressing your margins. It is a key EPCG benefit for export-driven industries looking to build consistent quality at scale for global buyers.5
Pro tip
Combining EPCG with the RoDTEP scheme benefits can further reduce your overall export cost structure.
What is an EPCG license?
The EPCG license, officially called an EPCG Authorization, is issued by the Regional Licensing Authority of the DGFT under Chapter 5 of the Foreign Trade Policy. It is valid for 24 months from the date of issue, within which all capital goods must be imported. Revalidation is not permitted.6
Before clearing goods duty-free, register the license with the jurisdictional customs authority and execute a bond or bank guarantee. Without this, customs will not release your capital goods. The bond is cancelled only after you fulfill the export obligation.
The documents required for EPCG redemption include shipping bills, e-BRCs, a CA-certified ANF-5B form, and the installation certificate number with its date, all submitted to your regional DGFT authority for closure.7
Before clearing goods duty-free, register the license with the jurisdictional customs authority and execute a bond or bank guarantee. Without this, customs will not release your capital goods. The bond is cancelled only after you fulfill the export obligation.
The documents required for EPCG redemption include shipping bills, e-BRCs, a CA-certified ANF-5B form, and the installation certificate number with its date, all submitted to your regional DGFT authority for closure.7
Pro tip
Exported goods often carry embedded taxes such as customs duty paid on raw materials or GST on input services. The Duty Drawback scheme in exports can help you recover additional costs beyond EPCG savings.
How to apply for an EPCG license online?
Step 1:
Log in to the DGFT portal (www.dgft.gov.in/CP) using your Digital Signature Certificate. Under "Services," navigate to "EPCG" and select "Apply for EPCG (ANF-5A)."
Step 2:
Complete the ANF-5A application form with your IEC, RCMC, export product list, and capital goods specifications.
Step 3:
Upload mandatory documents: Chartered Engineer's nexus certificate, CA certificate for export turnover, proforma invoice, IEC, and GST registration certificate.
Step 4:
Pay the applicable application fee online. MSME exporters are eligible for a reduced fee structure under FTP 2023.
Step 5:
Submit the application. Under FTP 2023, complete applications are usually processed in 3 to 7 working days. DGFT issues the authorization digitally upon approval.8
Step 6:
Register the EPCG license at the port of import with the jurisdictional customs authority. Execute a bond or bank guarantee before clearing goods duty-free.
Who is eligible for the EPCG scheme?
The EPCG scheme is open to a broad range of exporters across manufacturing and services, making it an inclusive export promotion program under the Foreign Trade Policy. Before you apply, you need a valid Importer Exporter Code (IEC) issued by the DGFT. This is a non-negotiable baseline requirement regardless of which category you fall under.
Manufacturer exporters
If you run a manufacturing unit, you can apply whether or not you work with an external production partner. The capital goods you import must be installed and used at your facility for producing export goods. If they are not, your export obligation will not be counted as fulfilled, and you risk paying back the saved duty with interest.
One important condition here is that the machinery stays with you until you close the authorization. It cannot be sold or transferred while the export obligation is open.9
One important condition here is that the machinery stays with you until you close the authorization. It cannot be sold or transferred while the export obligation is open.9
Merchant exporters
As a merchant exporter, you can also benefit from the scheme. You need to be linked to a supporting manufacturer, whose details are recorded on your license and shipment documents. Their production output counts toward your export obligation, making the arrangement mutually beneficial.
Service providers
Hotels, tour operators, logistics firms, and other service exporters are eligible to import equipment that directly supports their service delivery. Common Service Providers (CSP) have an added advantage. A single EPCG authorization can be shared across multiple exporters in a cluster, lowering the barrier for smaller businesses that may not qualify on their own. If your business operates as a fully export-dedicated unit, the EOU scheme may be a more suitable framework.
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Frequently Asked Questions
1. What is the fee for an EPCG license in India?
The application fee varies by the CIF value of the goods imported. Under FTP 2023, MSMEs pay a significantly reduced fee of up to ₹5,000, while non-MSME applicants pay up to ₹1 lakh.10 Note: These figures are current as of May 2026 and are subject to change. Check the official DGFT website for the latest fee structure.
2. Can we transfer an EPCG license?
No. The EPCG license is non-transferable. The imported capital goods also cannot be sold or moved until the export obligation is fully discharged and the EPCG certificate is issued by DGFT.
3. What is the validity period of an EPCG authorization?
The authorization is valid for 24 months from the date of issue for the import of capital goods. Revalidation is not permitted under FTP 2023.
4. Can an EPCG license be surrendered?
Yes. You can surrender an unused authorization anytime before the export obligation period ends with no penalty. Partial fulfillment requires payment of proportionate customs duty plus applicable interest.
5. How do you apply for an EPCG license online?
Log in to www.dgft.gov.in/CP using your Digital Signature Certificate, navigate to Services > EPCG > select “Apply for EPCG (ANF-5A)," upload required documents, and submit.
6. How does the DGFT e-BRC rule impact service exporters under EPCG?
From May 1, 2025, service exporters must select a World Trade Organization-defined mode of service delivery in every e-BRC submission. This directly affects how export proceeds are recorded and counted toward EPCG obligation fulfillment.
7. Who can benefit from the EPCG scheme?
Manufacturer exporters, merchant exporters tied to a supporting manufacturer, and service providers, including Common Service Providers (CSP), are all eligible.
Published on June 24, 2022.
Updated on May 30, 2026.
Sources:
1. https://www.dgft.gov.in/CP/?opt=epcg
2. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572®=3&lang=2
3. https://content.dgft.gov.in/Website/dgftprod/9f6336a2-e03d-4dbb-86eb-305615f0db13/FTP2023_Chapter05.pdf
4. https://apeda.gov.in//sites/default/files/dgft_notifications/not0113.pdf
5. http://customsandforeigntrade.com/FT%20Policy%20epcg.pdf
6. https://content.dgft.gov.in/Website/5C.pdf
7. https://content.dgft.gov.in/Website/DGFT_FAQs-Export_Promotion_Capital_Goods(EPCG)v1.0.pdf
8. https://files.capexil.org/2024/06/4.-FTP-Event-Presentation-2023.pdf
9. https://content.dgft.gov.in/Website/dgftprod/9f6336a2-e03d-4dbb-86eb-305615f0db13/FTP2023_Chapter05.pdf
10. https://files.capexil.org/2024/06/4.-FTP-Event-Presentation-2023.pdf
Updated on May 30, 2026.
Sources:
1. https://www.dgft.gov.in/CP/?opt=epcg
2. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1912572®=3&lang=2
3. https://content.dgft.gov.in/Website/dgftprod/9f6336a2-e03d-4dbb-86eb-305615f0db13/FTP2023_Chapter05.pdf
4. https://apeda.gov.in//sites/default/files/dgft_notifications/not0113.pdf
5. http://customsandforeigntrade.com/FT%20Policy%20epcg.pdf
6. https://content.dgft.gov.in/Website/5C.pdf
7. https://content.dgft.gov.in/Website/DGFT_FAQs-Export_Promotion_Capital_Goods(EPCG)v1.0.pdf
8. https://files.capexil.org/2024/06/4.-FTP-Event-Presentation-2023.pdf
9. https://content.dgft.gov.in/Website/dgftprod/9f6336a2-e03d-4dbb-86eb-305615f0db13/FTP2023_Chapter05.pdf
10. https://files.capexil.org/2024/06/4.-FTP-Event-Presentation-2023.pdf
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