EPCG Scheme (Export Promotion Capital Goods) {निर्यातोन्मुख पूंजीगत वस्तु योजना}

The Export Promotion Capital Goods (EPCG) Scheme allows an importer to import his goods and stuff at zero rates of customs duty. The scheme is basically focused on an export value that is equivalent to 6 times of custom duty saved on the importation of capital goods within the time period of 6 years from the date of issue by the authorization. So in simple words, we can say it is compulsory for the business to carry in foreign currency that is equal value to 600% of duty saved on importation calculated in domestic currency. And this entire process must be completed in the 6 years from availing the Export Promotion Capital Goods Scheme. Export Promotion Capital Goods (EPCG) Scheme really helps the country for producing quality goods as well as service and also helps enhance India’s export competitiveness. EPCG scheme allows importing capital goods used in post-production and pre-production at zero customs duty. 

What are the Export Promotion Capital Goods?

Export Promotion Capital Goods are allowed the exportation of capital goods from other countries and that is used in the production. This exports all types of goods like machinery as well as spare many more. To qualify for the Export Promotion Capital Goods, the commodity pretends in India must be exported outside India.

Which Capital Goods are allowed?

Under the Export Promotion Capital Goods Scheme a lot of capital goods are exported from other countries like spares (include reconditioned or refurbished), fixtures, jigs, tools, molds as well as dies. And the second-hand capital goods are also allowed to export under the EPCG Scheme. Under the Foreign Trade Policy (FTP), importation of capital goods is necessary for the development of export-oriented product-specific in the Export Promotion Capital Goods Authorization is acceptable at very low or even on nil rate of duty. 

Who would take benefit from this Scheme?

Under this scheme, the government of India will provide incentives as well as financial support to the exporters. This is the best scheme for those exporters who export heavy goods from other countries. This scheme is not beneficial for those who don’t expect to produce in quantity or expect to sell the goods entirely within the country.

The export duty under EPCG Scheme

The goods that are imported under the EPCG scheme are under the Export Obligation (EO). These imports are completed under an EO, which must be 6 times the duty that would be paid on the import of the goods.  The EO must be needed to fulfill within the 6 years.

Some important conditions for EPCG export obligation care to be fulfilled mentioned as below:

  • The authorization holder must have to fulfill the export obligation.
  • The export obligation under the EPCG scheme shall be over within three licensing years for the product and the same to the EO period.
  • When calculation the EO volume then all the shipments made under the advance authorization, drawback scheme, MEIS, and SEIS, as well as duty-free import Authorization (DFIA), will also be included.
  • While calculation the EO under the EPCG scheme Royalty payment for R and D services established in the freely adaptable currency as well as the foreign exchange also be counted.
  • The authorization that the exporter will receive under this scheme will be valid for 18 months from the date of its issue.
  • The percentage of required for units under this scheme in some states in 25%. These sates are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and J&K.
  • But in case the authorization holder completes 75% of the EO in the half of EO period or less than this then the remaining 25% will be waived.
  • To export green technology capital goods only 75% of the EO is required.

EPCG Scheme for Manufacturing Exporters

  • The scheme is best for those manufacturing exporter who does not have any other similar sustaining exporters.
  • A mercantile exporter with a supporting manufacturer as well as a service provider.

EPCG Scheme for Service Providers

  • The CSP must have to fulfill all the conditions of the Export Obligation, as well as the shipping bills, have the details of EPCG authorization.
  • Before starting the export the exporter must have to notify the concerned authority about CSP.
  • The CSP will have to provide bank assurance equal to the duty saved, along with the export goods.

How to get an EPCG License?

The exporter who wants to get a License under the EPCG scheme must have to fill an application form or file an application for the licensing authority of the Director-General of Foreign Trade. The application will be attached with all the required documents as well as details to complete the process.

Documents needed for EPCG License

The exporter must have top submit some documents that are mentioned below:

  • Import Export Code (IEC)
  • Registration cum Membership Certificate (RCMC)
  • The digital signature of the exporter
  • Registration certificate from the Tourism Department
  • Photocopy of Pan Card
  • If registered than Excise Registration details
  • GST Registration Certificate
  • Performa Invoice
  • Brochure
  • Self-Certified Copy and Original Certificate of Chartered Accountant
  • Self-Certified Copy and Original Certificate of Chartered Engineer

The Main Points to Remember

Any extension of the time limit available

In some exceptional cases, the extension of the time limit is available. The time limit extension is only for those exporters who will show evidence or proof to prove that the factors were not in control to meet the deadline.

Fine in case of Non-Compliance

In any case, the license holder under the EPCG scheme becomes unsuccessful to complete the stipulated export obligation then the exporter must have to pay the customs dues along with 15% interest annually to the customs authority.

Sell the goods in the Domestic Tariff Area

When the exporter according to his export obligation is able to meet the deadline then the exporter is allowable to sell goods in the Domestic Tariff Area.