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Export Promotion Capital Goods – EPCG Scheme

EPCG Scheme

Export Promotion Capital Goods – EPCG Scheme

Export Promotion Capital Goods (EPCG) Scheme helps facilitate import of capital goods into India for producing quality goods and service and to enhance India’s export competitiveness. EPCG scheme allows for import of capital goods used in pre-production, production and post-production at zero customs duty. In this article, we look at the basics for availing EPCG scheme in India.

EPCG Scheme Eligibility – Capital Goods

The following types of capital goods can be imported into India at zero customs duty under the EPCG scheme:

  • 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 upgradation or expansion.
  • Packaging machinery and equipment
  • Refractories for initial lining
  • Refrigeration equipment
  • Power generating sets
  • Machine tools
  • Catalysts for initial charge
  • Equipment and instruments for testing, research and development, quality and pollution control.
  • Capital goods used in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as those used in services sector.
  • Computer software systems
  • Spares, moulds, dies, jigs, fixtures
  • Catalysts for initial charge plus one subsequent charge

In addition to the above types of capital goods, other types of capital goods can also be permitted under the EPCG scheme subject to approval from the Exim Facilitation Committee at DGFT.

Note: Second hand capital goods are not eligible for EPCG scheme.

EPCG Scheme Eligibility – Applicant

Manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service providers are eligible under the EPCG scheme. EPCG scheme also covers Common Service Provider (CSP).

Export Obligation under EPCG Scheme

Import of capital goods under EPCG scheme is subject to an export obligation equivalent to six times of duty saved, to be fulfilled in 6 years reckoned from date of issue of EPCG authorisation. In case, EPCG authorisation holder fails to fulfil prescribed export obligation, the importer is required to pay customs duties plus interest as prescribed by Customs authority. Export obligation can be fullfilled by the EPCG authorisation holder through export of goods which are manufactured by him or his supporting manufacturer/services rendered by him, for which EPCG authorisation has been granted.

EPCG authorisation is valid for import for 18 months from date of issue and revalidation of EPCG authorisation is not permitted.