The EPCG Scheme permits import of capital goods at zero customs duty for pre-production, production, and post-production of export goods or services, subject to fulfillment of export obligation (EO). Introduced in the 1990s by the Directorate General of Foreign Trade (DGFT), the EPCG Scheme aims to promote manufacturing quality and export growth.
Eligible capital goods include machinery and equipment that help in upgrading technology, enhancing capacity, or replacing obsolete units across sectors like manufacturing, agriculture, mining, services, and R&D.
Entities eligible to apply for EPCG license include:
Applicants must ensure that the capital goods are exclusively used for export production until export obligation is fulfilled. CSPs must declare their supported exporters and provide necessary guarantees.
The scheme offers exemptions from:
For domestic procurement, GST is waived, and suppliers become eligible for deemed export benefits as per Para 7.03 of FTP.
Applicants must furnish the following:
⚠️ Capital goods must be imported within 18 months from the date of license issuance.
There are two types of Export Obligation (EO):
Maintain the average export turnover (for the same products) achieved in the 3 years before obtaining the EPCG license during the entire EO period. This ensures that the introduction of new machinery leads to higher export performance, not a decline.
Export goods worth 6 times the duties and taxes saved on imported capital goods within 6 years. For domestic procurement, the export obligation is reduced by 25%.
If the EO is not fulfilled within 6 years:
Exporters who fulfill:
may get early redemption benefits and closure of license without completing remaining obligations.
Let Global Tax Masters streamline your EPCG journey. We provide dedicated support from application to license redemption. Avoid delays, reduce costs, and stay compliant with all DGFT and customs requirements.
Contact us now to start your EPCG License Application.
