The EPCG (Export Promotion Capital Goods) Scheme is an initiative by the Government of India
under the Foreign Trade Policy to promote exports by allowing Indian businesses to import capital
goods at zero or concessional customs duty.
Key Features of EPCG Scheme:
1. Duty-Free Import: Capital goods required for production can be imported at zero customs
duty.
2. Export Obligation (EO): The exporter must fulfill an export obligation equivalent to 6 times
the duty saved on imports within 6 years.
3. Capital Goods: Includes machinery, equipment, spare parts, jigs, tools, and fixtures used in
production.
4. Indigenous Sourcing: If sourced domestically, the supplier is eligible for deemed export
benefits.
5. Sector-Specific Benefits: Special relaxations for certain industries like handicrafts,
agriculture, and textiles.
Who Can Apply?
• Manufacturers
• Merchant exporters tied with supporting manufacturers
• Service providers (hotels, hospitals, tour operators, etc.)
Benefits of EPCG Scheme:
Reduced Capital Costs: Helps businesses upgrade technology at a lower cost.
Encourages Export Growth: Makes Indian products more competitive in global markets.
Boosts Domestic Manufacturing: Encourages the use of high-tech machinery.
How to Apply for EPCG Scheme?
To apply for the Export Promotion Capital Goods (EPCG) Scheme, follow these steps:
Step 1: Prepare Required Documents
Before applying, ensure you have the following documents ready:
Import-Export Code (IEC) – Issued by DGFT (Directorate General of Foreign Trade).
RCMC (Registration Cum Membership Certificate) – From a relevant Export Promotion Council.
PAN & GST Details – Of the business entity.
CA Certificate – Certifying previous exports (if applicable).
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Proforma Invoice of Capital Goods – From the supplier (foreign or domestic).
Past Export Performance – If applying under the Common Service Provider (CSP) category.
Step 2: Online Application on DGFT Portal
1. Visit the DGFT Website – [Link]
2. Login with DSC (Digital Signature Certificate) – Required for authentication.
3. Go to EPCG Section – Under the ‘Services’ tab, select ‘EPCG Scheme’.
4. Fill Application Form ANF-5A – Provide details like:
o Firm details
o Export product details
o Machinery specifications
o Export Obligation commitment
5. Upload Documents – Attach required files in PDF format.
6. Pay Application Fee – Usually ₹1 per ₹1,000 of duty saved (minimum ₹500).
Step 3: Application Processing & License Issuance
Regional DGFT Office Reviews – Your application and documents.
EPCG License (Authorization) Issued – If approved, you get an EPCG License (valid for import of
capital goods).
Step 4: Fulfill Export Obligation (EO)
Once the capital goods are imported under EPCG, you must:
• Meet Export Target: Export 6 times the duty saved within 6 years.
• Submit Annual Reports: Update DGFT on progress via ANF-5B form.
• EODC (Export Obligation Discharge Certificate): After fulfilling the obligation, apply for EODC
to close the EPCG license.
Common Challenges & Solutions
Delayed Approvals? → Ensure all documents are in order & follow up with DGFT.
Not Meeting Export Obligation? → Request extension or block-wise fulfillment.
Compliance Issues? → Hire an export consultant for smooth processing.
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How to Maximize Benefits Under the EPCG Scheme?
To make the most of the EPCG (Export Promotion Capital Goods) Scheme, follow these strategies:
1⃣ Plan Your Capital Goods Import Smartly
Import High-Value Capital Goods
• Since duty-free imports save huge costs, invest in advanced machinery that boosts
production efficiency.
• Choose energy-efficient, high-output machines to enhance competitiveness.
Buy Only What’s Necessary
• Don’t over-import just because it’s duty-free. Import machinery that aligns with your export
growth strategy.
Consider Indigenous Sourcing
• If available, source capital goods from domestic manufacturers to get deemed export
benefits (like GST refunds and duty drawback).
2⃣ Optimize Your Export Obligation (EO)
Choose High-Margin Export Products
• Since EO is 6x the duty saved, focus on products with higher margins & global demand to
meet EO comfortably.
Use Deemed Exports & Indirect Exports
• Supply to EOU (Export Oriented Units), SEZ (Special Economic Zones), or Mega Projects—
these qualify as deemed exports under EPCG.
• Partner with merchant exporters to fulfill EO via indirect exports.
Plan for Export Growth Before Importing
• Ensure confirmed export orders before applying.
• If uncertain, consider block-wise EO fulfillment, where exports can be fulfilled gradually.
3⃣ Reduce Compliance Burden & Avoid Penalties
Maintain Proper Documentation
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• Keep records of imported capital goods, export invoices, and EO fulfillment proofs for DGFT
audits.
File Annual Reports on Time
• Submit ANF-5B to DGFT annually to report your EO progress.
• Avoid last-minute filings—missing EO compliance leads to huge penalties (duty + interest).
Request EO Extension if Needed
• If unable to meet EO within 6 years, apply for an extension in advance to avoid penalties.
4⃣ Combine EPCG with Other Export Incentives
MEIS / RoDTEP Benefits
• Claim RoDTEP (Remission of Duties and Taxes on Exported Products) on exports under
EPCG.
Advance Authorization + EPCG
• If raw materials are also imported, use Advance Authorization Scheme along with EPCG for
full duty exemption.
GST Refunds
• Apply for GST input tax credit (ITC) refunds on domestically procured capital goods.
5⃣ Leverage Expert Help for Hassle-Free Benefits
Consult an Export Specialist
• Export consultants help in filing EPCG applications, managing EO, and ensuring compliance
without errors.
Use a Freight Forwarder & CHA
• Proper logistics planning avoids delays in customs clearance, which can affect timely exports.
Final Tip:
EPCG is most beneficial if planned strategically with long-term export growth in mind.
Would you like personalized guidance based on your export business?
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Things to Take Care of in the EPCG Scheme
To avoid penalties, compliance issues, and unnecessary costs, keep these key points in mind when
using the Export Promotion Capital Goods (EPCG) Scheme):
1⃣ Choose the Right Capital Goods & Suppliers
Ensure Machinery is Eligible
• Only import capital goods used for manufacturing or service exports.
• Used/second-hand machinery above 10 years old is not allowed.
Source from a Reliable Supplier
• Ensure the machine supplier provides proper invoices, technical specifications, and quality
certifications to avoid issues in import documentation.
Compare Duty Costs Before Importing
• If the normal customs duty is already low, EPCG benefits may be minimal.
• Check the actual duty savings vs. compliance burden before applying.
2⃣ Carefully Plan the Export Obligation (EO)
Understand the 6x Export Commitment
• You must export 6 times the duty saved within 6 years (starting from EPCG License
issuance).
• Failing to meet the obligation leads to heavy penalties & duty repayment with interest (18%
p.a.).
Track EO Progress Regularly
• Submit an annual report (ANF-5B) to DGFT to avoid compliance issues.
• If unable to meet EO, apply for block-wise fulfillment or an extension in advance.
Consider Indirect & Deemed Exports
• Export via merchant exporters or supply to EOU/SEZ to fulfill EO faster.
• Deemed exports (Mega Power Projects, EPC contracts) also count toward EO.
3⃣ Handle Documentation & Compliance Properly
Maintain Proper Records
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• Keep copies of:
o EPCG License
o Bill of Entry (Import Documents)
o Machinery Installation Certificate
o Export Invoices & Shipping Bills
o Export Performance Reports
Follow Post-Export Documentation
• Once EO is met, apply for EODC (Export Obligation Discharge Certificate) from DGFT to close
the EPCG License.
Avoid GST & Duty Non-Compliance
• If you import under EPCG and later sell domestically, you may need to repay duties with
interest.
4⃣ Avoid Common EPCG Mistakes
Importing Capital Goods Without Checking EO Feasibility → First, ensure export demand exists.
Missing Annual EO Reporting (ANF-5B) → Leads to compliance issues & license suspension.
Not Claiming Deemed Exports → Missing out on easier EO fulfillment routes.
Waiting Till the Last Year to Meet EO → If exports slow down, penalties can be high.
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