Epcg Export Obligation

EPCG scheme facilitates import of capital goods for producing quality goods and services to enhance India's export competitiveness. Under the EPCG scheme, capital goods imported at zero customs duty must fulfil EPCG export obligation equivalent to 6 times of duty saved on the capital goods. In this article, we review the Epcg Export Obligation requirement in detail.

Epcg Export Obligation Requirement

Import of capital goods under EPCG scheme is subject to an export obligation equivalent to 6 times of duty saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of EPCG authorisation. The following are some of the conditions are applicable for the fulfillment of export obligation:

Export obligation must 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.
Export obligation under the scheme shall be, over and above, the average level of exports achieved by the preceding three licensing years for the same and similar products within the overall export obligation period including extended period.
Shipment under Advance Authorisation, DFIA, Drawback scheme or reward schemes would also count for export obligation fulfilment.

Calculating Export Obligation

For direct imports, export obligation is calculated with reference to the actual duty saved. In case of domestic sourcing, export obligation is calculated with reference to notional customs duties saved on FOR value.

Incentive for Early Export Obligation Fulfilment

If an authorisation holder has fulfilled 75% or more of specific export obligation and 100% of the average export obligation till date, if any, in half or less than half the original export obligation period, remaining export obligation shall be condoned and the authorisation redeemed. The incentive for early export obligation fulfilment was introduced to accelerate exports.

Incentive for Green Technology Products

Incentive of reduced export obligation of 75% is application for green technology products such as:

Equipment for solar energy decentralized and grid connected products
Bio-mass gassifier
Bio-mass or waste boiler
Vapour absorption chillers
Waste heat boiler
Wast heat recovery units
Unfired heat recovery steam generators
Wind turbine
Solar collector and parts
Water treatment plants
Wind mill
Wind mill turbine
Wind mill engine
Wind powered generating sets
Electrically operated vehicles
Solar cells

Incentive for North East Regions

Businesses located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu & Kashmir are eligible for reduction of export obligation by 25%.

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Frequently Asked Questions

Common questions about EPCG Export Obligation Requirements for India Exports.

The EPCG (Export Promotion Capital Goods) scheme facilitates import of capital goods at zero customs duty for producing quality goods and services to enhance India's export competitiveness. Under this scheme, capital goods can be imported at zero customs duty, subject to fulfilling an export obligation equivalent to 6 times of the duty saved.

The export obligation under the EPCG scheme is equivalent to 6 times of the duty saved on the imported capital goods. This export obligation must be fulfilled within 6 years from the date of issuance of the EPCG authorization.

The export obligation must be fulfilled by the authorization holder through the export of goods manufactured by them or their supporting manufacturer, or through services rendered by them, for which the EPCG authorization has been granted.

The export obligation under the EPCG scheme must be over and above the average level of exports achieved by the preceding three licensing years for the same and similar products within the overall export obligation period, including any extended period.

Yes, shipments under the Advance Authorization, Duty-Free Import Authorization (DFIA), Drawback scheme, or other reward schemes would also count towards the fulfillment of the EPCG export obligation.

For direct imports, the export obligation is calculated with reference to the actual duty saved. In case of domestic sourcing, the export obligation is calculated with reference to the notional customs duties saved on the FOR (Free on Road) value.

If an authorization holder has fulfilled 75% or more of the specific export obligation and 100% of the average export obligation till date, if any, in half or less than half the original export obligation period, the remaining export obligation shall be condoned, and the authorization redeemed.

For green technology products, such as equipment for solar energy, wind turbines, waste heat recovery units, and electrically operated vehicles, the export obligation is reduced to 75%.

Yes, businesses located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Jammu & Kashmir are eligible for a 25% reduction in their export obligation under the EPCG scheme.

For capital goods sourced domestically under the EPCG scheme, the export obligation is calculated with reference to the notional customs duties saved on the FOR (Free on Road) value of the capital goods.