What is EPCG scheme and How does it work ??

Export Promotion Capital Goods (EPCG) Scheme objective is to facilitate the import of capital goods with the aim of producing quality goods and services to enhance India’s exports. This scheme allows the import of capital goods under zero customs duty.

This scheme is eligible for manufacturer exporters with or without supporting manufacturers.

Merchant Exporters who are tied up with the supporting manufacturers and service providers. In that case, the name of supporting manufacturer should be mentioned on the EPCG Authorization before installation of the capital goods in the factory of the supporting manufacturers.

This EPCG Scheme is also eligible for Service Provider who is certified as a Common Service Provider (CSP) by the DGFT – HQs, Department of Commerce in a Town of Export Excellence or Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) subject to provisions of Foreign Trade Policy.

Importer or Exporter who are availing this scheme need to submit the Bank Guarantee (BG) to the Customs Authority which is calculated on the customs duty.

The EPCG Authorization holder need to fulfil the Export Obligation which is equal to 6 times of the Duty Saved Value of the EPCG Authorization within stipulated time period.

The Authorization holder can fulfil the export obligation by doing Direct Exports by mentioning the EPCG Authorization Number in the Shipping Bills. In case of Third-party exports done by the authorization holder, authorization number and IEC Number of the EPCG Holder should be mentioned in the Exporter Shipping Bill and Supply Invoices. 

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