The Export Promotion Capital Goods (EPCG) Scheme is one of India's most powerful export promotion initiatives, enabling manufacturers to import or procure eligible capital goods with customs duty exemption or GST refund, subject to fulfilment of export obligations prescribed under the Foreign Trade Policy.

Whether you are establishing a new manufacturing unit, modernizing an existing factory, expanding production capacity, or investing in advanced automation, the EPCG Scheme can significantly reduce your initial capital investment while helping your business compete in global markets.

However, obtaining an EPCG Authorisation is only the beginning. Businesses must also comply with DGFT procedures, customs regulations, installation requirements, export obligation monitoring, and licence closure formalities.

At Unique Group, our DGFT experts provide comprehensive EPCG consultancy, from project evaluation and application filing to customs registration, export obligation management, Policy Relaxation Committee (PRC) representation, and Export Obligation Discharge Certificate (EODC) support.

Quick Overview of the EPCG Scheme

Particular	Details
Scheme Name	Export Promotion Capital Goods (EPCG) Scheme
Governing Authority	Directorate General of Foreign Trade (DGFT)
Legal Framework	Foreign Trade Policy (FTP) 2023 and Handbook of Procedures (HBP)
Objective	Promote exports through import or domestic procurement of capital goods
Primary Benefit	Customs duty exemption or 100% GST refund on eligible capital goods, subject to policy conditions
Export Obligation	Generally six times the customs duty saved, subject to applicable policy provisions
Export Obligation Period	Generally six years from the date of Authorisation
Eligible Applicants	Manufacturer Exporters, Merchant Exporters supporting manufacturers, Service Providers and other eligible entities under the FTP
Domestic Procurement	Permitted for eligible capital goods under the Scheme via Invalidation process
Industries Covered	Food Processing, Engineering, Pharmaceuticals, Textiles, Chemicals, Electronics, Renewable Energy, Automotive, Medical Devices and many more

Why Read This Guide?

The EPCG Scheme is one of the most researched DGFT export incentive schemes in India, yet many businesses struggle to understand its eligibility conditions, documentation requirements, export obligations, and compliance procedures.

This guide has been developed as a comprehensive knowledge resource for manufacturers, exporters, finance professionals, project consultants, and business owners seeking a clear understanding of the scheme.

Whether you are applying for an EPCG Authorisation for the first time or managing an existing licence, this guide provides practical insights to help you make informed decisions and maintain compliance throughout the lifecycle of the authorisation.

What is the EPCG Scheme?

The Export Promotion Capital Goods (EPCG) Scheme is one of India's flagship export promotion initiatives administered by the Directorate General of Foreign Trade (DGFT) under the Foreign Trade Policy.

The scheme enables eligible businesses to import or procure domestically manufactured capital goods required for producing quality goods and services while availing customs duty exemption or GST refund, subject to fulfilment of the prescribed export obligation.

Unlike financial subsidy schemes that reimburse a portion of project costs after investment, the EPCG Scheme primarily provides an upfront reduction in import duty or GST liability, improving project cash flow and reducing the initial capital investment required for technology acquisition.

The underlying principle of the scheme is simple:

The Government supports industrial modernization by reducing the cost of acquiring advanced manufacturing equipment. In return, businesses commit to increasing exports over a specified period, thereby contributing to India's export growth and industrial competitiveness.

This creates a mutually beneficial framework where businesses gain access to advanced technology at a lower initial cost, while the country benefits from higher exports, employment generation, technology upgradation, and enhanced manufacturing capabilities.

Today, the EPCG Scheme is widely used across sectors including Food Processing, Pharmaceuticals, Engineering, Automobile, Components, Renewable Energy, Electronics, Medical Devices, Chemicals, Plastics, Packaging, Textile Manufacturing, Steel and Metal Processing and Precision Engineering.

The scheme has supported thousands of manufacturing projects across India by enabling businesses to invest in world-class production technologies while expanding their presence in international markets.

Benefits of EPCG Scheme

Modern manufacturing requires continuous investment in advanced machinery, automation, testing equipment, quality control systems, and energy-efficient technologies.

For many businesses, customs duties on imported capital goods or GST on indigenously procured goods significantly increase project costs and delay investment decisions.

Recognizing this challenge, the Government of India introduced the EPCG Scheme with the objective of encouraging export-oriented industrial growth.

The EPCG Scheme seeks to:

• Reduce the cost of technology acquisition.
• Promote modernization of Indian manufacturing.
• Encourage adoption of advanced production technologies.
• Improve product quality to international standards.
• Enhance global competitiveness of Indian industries.
• Increase exports of manufactured goods and eligible services.
• Generate employment through industrial expansion.
• Support national initiatives such as Make in India and Atmanirbhar Bharat.

Types of EPCG Scheme

The Export Promotion Capital Goods (EPCG) Scheme offers multiple options for acquiring eligible capital goods based on your business requirements. Whether you're importing advanced machinery from overseas, or purchasing equipment from Indian manufacturers, the EPCG Scheme provides customs duty benefits to support technology upgradation and export growth. Choose the option that best fits your investment strategy.

Key Advantages at a Glance

Eligibility under the EPCG Scheme

Before applying for an EPCG Authorisation, businesses must determine whether they satisfy the eligibility conditions prescribed under the Foreign Trade Policy and Handbook of Procedures.

Although the scheme covers a wide range of industries, applicants must ensure that both the business entity and the proposed capital goods qualify under the applicable provisions.

Who Can Apply?

The following categories are generally eligible to apply under the EPCG Scheme.

Who May Not Benefit from the Scheme?

The EPCG Scheme is intended for businesses making genuine investments in capital goods to support export-oriented manufacturing or eligible services.

Businesses importing goods for trading, resale, or non-industrial purposes generally do not fall within the intended scope of the scheme. Eligibility should always be evaluated with reference to the latest Foreign Trade Policy and applicable DGFT guidelines.

Eligible Capital Goods under the EPCG Scheme

Understanding what qualifies as capital goods is critical before filing an EPCG application.

Capital goods are assets used directly or indirectly in manufacturing, production, processing, quality control, packaging, testing, or other eligible industrial activities. These assets are intended for long-term use and contribute to the manufacture of export products or the provision of eligible services.

• Capital goods used in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and other eligible activities.
• Packaging machinery and equipment.
• Refractories for initial lining.
• Machine tools.
• Equipment and instruments for testing, research and development, quality control and pollution control.
• Computer software systems.
• Spares, moulds, dies, jigs and fixtures.
• Catalysts for initial charge plus one subsequent charge.

Capital Goods That May Not Qualify for EPCG

The Foreign Trade Policy, including Appendix 5F, specifies certain items that are either not permitted under the Scheme or are allowed only under specific conditions or for particular sectors.

Industries Covered under the EPCG Scheme

One of the key strengths of the EPCG Scheme is its applicability across a wide range of manufacturing sectors that contribute to India's export economy.

Complete Process under the EPCG Scheme

Obtaining an EPCG Authorisation involves more than submitting an online application. Businesses must evaluate project eligibility, identify eligible capital goods, prepare supporting documentation, comply with DGFT and Customs requirements, and fulfil post-approval obligations throughout the life of the Authorisation.

While the DGFT has digitized most procedures through its online portal, the success of an EPCG application depends on the accuracy of the information submitted and the applicant's understanding of the applicable provisions under the Foreign Trade Policy (FTP) and the Handbook of Procedures (HBP).

EPCG Life Cycle - Step-by-Step Overview

The EPCG Scheme follows a structured process from project planning to licence closure. Understanding each stage helps businesses avoid delays, deficiencies, and future compliance issues.

Common Reasons for DGFT Deficiency Letters

Many EPCG applications are delayed because of avoidable documentation errors or incomplete submissions.

Some of the most common reasons include:

• Incorrect machinery descriptions.
• Inconsistent import values.
• Missing supporting documents.
• Errors in applicant information.
• Incomplete declarations.
• Incorrect product classification and HS codes.
• Mismatch between uploaded documents and application details.
• Unclear technical specifications.

A thorough review before submission can significantly reduce the likelihood of deficiencies.

Documents Required for the EPCG Scheme

Preparing complete and accurate documentation is one of the most important aspects of a successful EPCG application.

The exact document requirements may vary depending on the nature of the applicant, capital goods, and applicable policy provisions.

Best Practices for a Successful EPCG Application

Businesses can improve the quality of their EPCG application by following a structured approach.

Why Professional Guidance Matters

Although the online filing process appears straightforward, EPCG compliance extends far beyond the submission of an application.

Errors made during the initial application stage can lead to future complications involving:

• Export Obligation calculations
• Customs compliance
• Amendments to the Authorisation
• Installation Certificate requirements
• Policy interpretation
• EODC processing
• DGFT deficiency responses

Professional guidance helps businesses navigate these complexities, minimize procedural errors, and ensure smooth compliance throughout the lifecycle of the EPCG Authorisation.

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Export Obligation under the EPCG Scheme

The Export Obligation (EO) is the foundation of the Export Promotion Capital Goods (EPCG) Scheme. In return for customs duty benefits or GST refund on eligible capital goods, the Authorisation Holder is required to achieve a prescribed level of exports within a specified period. There are 2 types of Export Obligation that needs to be fulfilled.

Learn More about Export Obligation

Maintaining Export Records

Proper documentation is essential throughout the Export Obligation period. Every export transaction should be supported by complete and organized records.

Businesses should preserve documents such as:

• Shipping Bills
• Export Invoices
• e-BRCs (Electronic Bank Realisation Certificates)
• Bills of Lading or Airway Bills
• Foreign Remittance Records
• GST Documentation
• LUT or Bond documents where applicable
• Export Contracts or Purchase Orders
• Product-wise Export Statements

Maintaining these records on an ongoing basis simplifies verification during EODC processing and reduces the risk of compliance issues.

Every EPCG Authorisation Holder is required to update their export performance on the DGFT portal at least once every financial year, even if no exports have been made during that period (Nil Exports). Timely annual reporting is mandatory for monitoring compliance with the Export Obligation and helps avoid procedural issues during the redemption and closure of the EPCG Authorisation.

Installation Certificate under the EPCG Scheme

The Installation Certificate is an important post-import compliance requirement under the EPCG Scheme. It certifies that the imported or domestically procured capital goods have been installed at the approved manufacturing or service facility and are being used for their intended purpose.

The certificate typically includes details such as the EPCG Authorisation number, description of the machinery, installation location, date of installation, and confirmation that the equipment is operational. Timely submission of the Installation Certificate, where required, helps ensure smooth compliance and facilitates the successful processing of the Export Obligation Discharge Certificate (EODC).

Learn More about Installation Certificate

Export Obligation Period and Extensions

Under the EPCG Scheme, EO must generally be fulfilled within six years from the date of issue of the EPCG Authorisation, unless otherwise provided under the applicable Foreign Trade Policy.

Block-wise Extension

If 50% of EO is not achieved during the first block, an application may be filed with DGFT for block-wise extension by paying the prescribed Composition Fee, subject to applicable policy provisions.

Extension of Export Obligation Period

If the entire EO is not fulfilled within the initial six-year period, the policy may permit an extension of up to two additional years, subject to prescribed conditions and payment of applicable Composition Fee.

Failure to Fulfil Export Obligation

If EO remains unfulfilled even after the extended period, the Authorisation Holder may be liable for payment of customs duties saved, interest, penalties, or other action under the Foreign Trade Policy, Customs Act, and other applicable regulations.

Read More: Complete Guide to Extension of Export Obligation under the EPCG Scheme.

Policy Relaxation Committee (PRC)

The Policy Relaxation Committee (PRC) is constituted by the Directorate General of Foreign Trade (DGFT) to examine cases where strict application of policy provisions may result in genuine hardship.

The Committee provides a mechanism for applicants to seek relaxation in deserving cases that cannot be resolved through routine procedural provisions.

It is important to understand that approaching the PRC does not guarantee approval. Each application is considered independently based on the facts of the case, documentary evidence, applicable policy provisions, and the recommendations of the competent authorities.

Situations Where PRC May Be Relevant

Businesses may consider approaching the PRC in situations involving genuine hardship or exceptional circumstances, such as:

• Delay in submission of the Installation Certificate.
• Delay in fulfilling Export Obligation.
• Procedural lapses not involving fraud or misrepresentation.
• Cases requiring relaxation of specific procedural requirements.
• Compliance issues arising from exceptional business circumstances.

The exact admissibility of a case depends on the applicable provisions of the Foreign Trade Policy and the Committee's assessment.

Read More: Policy Relaxation Committee (PRC) under the EPCG Scheme.

Export Obligation Discharge Certificate (EODC)

The Export Obligation Discharge Certificate (EODC) is the final milestone in the lifecycle of an EPCG Authorisation. It serves as the formal confirmation issued by DGFT that the Authorisation Holder has successfully fulfilled the prescribed Export Obligation and complied with the applicable conditions of the Scheme.

Obtaining the EODC is essential because it signifies successful closure of the EPCG Authorisation and completion of the obligations undertaken while availing customs duty benefits.

Why is the EODC Important?

The EODC provides documentary evidence that:

• Export Obligation has been fulfilled.
• Applicable compliance requirements have been completed.
• DGFT has accepted the applicant's submissions.
• The EPCG Authorisation is eligible for closure in accordance with the applicable policy.

Businesses should retain the EODC and all supporting records as part of their long-term compliance documentation.

Learn More about EODC Process

EPCG Compliance Checklist

Successful implementation of the EPCG Scheme depends on disciplined compliance rather than simply obtaining the Authorisation.

The following checklist provides a quick overview of the major compliance stages.

Frequently Asked Questions (FAQs) on the EPCG Scheme

The following FAQs address some of the most common questions asked by manufacturers, exporters, finance professionals, and business owners regarding the Export Promotion Capital Goods (EPCG) Scheme. These answers are intended to provide a general understanding of the Scheme. Businesses should always refer to the latest Foreign Trade Policy (FTP), Handbook of Procedures (HBP), DGFT notifications, and Customs notifications for the provisions applicable to their specific case.

• What is the EPCG Scheme?

  The Export Promotion Capital Goods (EPCG) Scheme is an export promotion initiative administered by the Directorate General of Foreign Trade (DGFT). It allows eligible businesses to import or procure specified capital goods with customs duty benefits, subject to fulfillment of the prescribed Export Obligation within the applicable period.

• What is the objective of the EPCG Scheme?

  The primary objective is to encourage technology upgradation, reduce the cost of capital investment, improve export competitiveness, enhance manufacturing capabilities, and promote India's exports by facilitating investment in eligible capital goods.

• Who administers the EPCG Scheme?

  The Scheme is administered by the Directorate General of Foreign Trade (DGFT) under the Foreign Trade Policy, while Customs authorities oversee the implementation of customs duty benefits on eligible imports.

• Who can apply for an EPCG Authorisation?

  Eligible applicants generally include:

  • Manufacturer Exporters
  • Merchant Exporters supporting manufacturers
  • Eligible service providers (where covered under the applicable policy)
  • New manufacturing units
  • Existing manufacturing units planning modernization or expansion

  Eligibility is subject to the prevailing Foreign Trade Policy.

• What is an EPCG Authorisation?

  An EPCG Authorisation is the approval issued by DGFT permitting an eligible applicant to avail customs duty benefits on specified capital goods subject to compliance with the Scheme's conditions.

• What are capital goods under the EPCG Scheme?

  Capital goods generally include machinery, equipment, production systems, testing equipment, packaging machinery, quality control instruments, and other long-term assets used in manufacturing or eligible service activities.

• Can capital goods be procured from Indian manufacturers?

  Yes. Subject to the applicable provisions of the Foreign Trade Policy, eligible capital goods may be procured from domestic manufacturers in addition to being imported.

• Which industries can benefit from the EPCG Scheme?

  The Scheme is widely used across industries such as:

  • Food Processing
  • Pharmaceuticals
  • Engineering
  • Textiles
  • Electronics
  • Renewable Energy
  • Chemicals
  • Medical Devices
  • Automobile Components
  • Plastics and Packaging
• What are the key benefits of the EPCG Scheme?

  Major benefits include:

  • Customs duty benefits on eligible capital goods
  • Lower project cost
  • Technology upgradation
  • Better cash flow
  • Improved export competitiveness
  • Support for manufacturing expansion
• What is Export Obligation (EO)?

  Export Obligation is the commitment undertaken by the Authorisation Holder to achieve prescribed exports after availing customs duty benefits under the EPCG Scheme.

• How is Export Obligation calculated?

  As a general principle, Export Obligation is calculated as six times the Customs Duty Saved, subject to the applicable Foreign Trade Policy, Customs notifications, and the specific conditions mentioned in the EPCG Authorisation.

• What is the Export Obligation period?

  The Export Obligation period is generally six years from the date of issue of the EPCG Authorisation, unless otherwise specified under the applicable policy or the Authorisation itself.

• What is Block-wise Export Obligation?

  Block-wise Export Obligation requires businesses to achieve prescribed export performance during specified periods within the overall Export Obligation timeframe, rather than waiting until the final year.

• Why is Block-wise compliance important?

  Regular compliance helps businesses monitor export performance, identify shortfalls early, avoid procedural issues, and facilitate smoother licence closure.

• What happens if Export Obligation is not fulfilled?

  Failure to fulfill Export Obligation may lead to recovery of applicable customs duty benefits, interest, penalties where applicable under law, or other actions in accordance with the Foreign Trade Policy and Customs regulations.

• Can the Export Obligation period be extended?

  Yes. The Foreign Trade Policy provides mechanisms for seeking extension of the Export Obligation period in eligible cases, subject to applicable provisions and approval by the competent authority.

• What is an Installation Certificate?

  An Installation Certificate is a document confirming that the imported or domestically procured capital goods have been installed at the approved location and are being used for the intended manufacturing or service activity, where required under the applicable policy.

• Is an Installation Certificate mandatory?

  The requirement depends on the applicable provisions of the Foreign Trade Policy and the Handbook of Procedures. Businesses should verify the requirements applicable to their EPCG Authorisation.

• What is a Composition Fee?

  A Composition Fee is a fee that may be payable in certain cases involving extensions, amendments, or regularization of procedural matters under the applicable provisions of the Foreign Trade Policy.

• What is the Policy Relaxation Committee (PRC)?

  The Policy Relaxation Committee (PRC) is a committee constituted by DGFT to consider requests involving genuine hardship where relaxation of certain policy provisions may be sought, subject to applicable rules and individual case merits.

• When should a business approach the PRC?

  Applicants may approach the PRC in eligible cases involving genuine hardship, procedural delays, or other exceptional circumstances that cannot be resolved through the normal procedural framework.

• What is an EODC?

  The Export Obligation Discharge Certificate (EODC) is issued by DGFT after verifying that the prescribed Export Obligation has been fulfilled and the applicable compliance requirements have been completed.

• Why is the EODC important?

  The EODC serves as evidence that the EPCG Authorisation has been successfully complied with and is eligible for closure under the applicable policy.

• What documents are generally required for an EPCG application?

  Typical documents may include:

  • Import Export Code (IEC)
  • GST Registration
  • Company incorporation documents
  • Machinery quotations
  • Technical specifications
  • Financial documents
  • Project information

  The exact requirements depend on the applicable policy and the nature of the project.

• What documents are required for EODC?

  Depending on the applicable policy, documents may include:

  • Export statements
  • Shipping Bills
  • e-BRCs
  • Bills of Entry
  • Installation Certificate (where applicable)
  • Import documents
  • Reconciliation statements
  • Supporting certificates
• What is a DGFT Deficiency Letter?

  It is issued when additional information, clarification, or supporting documents are required before an application can be processed.

• How can businesses avoid Deficiency Letters?

  Applicants should:

  • Submit complete documentation.
  • Ensure consistency across all records.
  • Verify machinery descriptions.
  • Check values carefully.
  • Review applications before submission.
  • Respond promptly if clarification is sought.
• Can an EPCG Authorisation be amended?

  Yes. Amendments may be permitted in accordance with the applicable provisions of the Foreign Trade Policy and the Handbook of Procedures. The nature of the amendment determines the applicable process.

• What records should businesses maintain during the Export Obligation period?

  Businesses should preserve:

  • Shipping Bills
  • Bills of Entry
  • Export Invoices
  • Commercial Invoices
  • e-BRCs
  • Installation records
  • Import documents
  • Export contracts
  • Production records
  • DGFT correspondence

  Maintaining organized documentation simplifies compliance and EODC processing.

• Can new manufacturing units apply under the EPCG Scheme?

  Yes. Eligible greenfield manufacturing projects may apply for an EPCG Authorisation, subject to the applicable policy provisions.

• Can existing manufacturing units avail the EPCG Scheme?

  Yes. Existing manufacturers planning modernization, capacity expansion, technology upgradation, diversification, or automation may utilize the Scheme, subject to eligibility.

• Is the EPCG Scheme suitable for MSMEs?

  Yes. The Scheme can benefit Micro, Small, and Medium Enterprises (MSMEs) investing in eligible capital goods for export-oriented manufacturing, provided they satisfy the applicable eligibility conditions.

• What is the difference between the EPCG Scheme and Advance Authorization?

  The EPCG Scheme provides customs duty benefits on capital goods, whereas the Advance Authorization Scheme primarily provides duty benefits on inputs or raw materials used in the manufacture of export products. The choice between the two depends on the nature of the business requirement.

• Can a business use both EPCG and other government incentive schemes?

  The availability of benefits under multiple schemes depends on the provisions governing each scheme and the applicable policy framework. Businesses should evaluate the interaction between schemes before proceeding.

• How long does the EPCG process take?

  The processing timeline varies depending on the completeness of the application, project complexity, documentation quality, and the time required for regulatory examination. There is no fixed processing period applicable to every case.

• What are the most common compliance mistakes under the EPCG Scheme?

  Common issues include:

  • Incomplete documentation
  • Incorrect machinery classification
  • Delayed Installation Certificate
  • Poor Export Obligation monitoring
  • Failure to track block-wise obligations
  • Missing export records
  • Delayed responses to DGFT communications

  Implementing a structured compliance system can help avoid these problems.

• When should a business seek professional EPCG consulting?

  Professional guidance is particularly valuable when:

  • Setting up a new manufacturing project
  • Importing high-value machinery
  • Calculating Export Obligation
  • Preparing complex applications
  • Responding to DGFT deficiencies
  • Seeking amendments or extensions
  • Applying before the PRC
  • Filing for EODC

  Expert support can reduce procedural risks and improve compliance throughout the lifecycle of the Authorisation.

Conclusion

The EPCG Scheme is one of India's most effective mechanisms for encouraging technology upgradation and export-led industrial growth. When planned and implemented correctly, it enables businesses to reduce capital investment costs, adopt advanced manufacturing technologies, and compete more effectively in international markets.

Success under the Scheme, however, depends not only on obtaining an EPCG Authorisation but also on maintaining consistent compliance throughout the entire lifecycle, from application and machinery import to Export Obligation fulfillment and EODC.

With the right strategy, documentation, and expert guidance, businesses can maximize the long-term value of the EPCG Scheme while minimizing regulatory risks.

If you're planning to invest in new machinery or expand your export capabilities, Unique Group is ready to help you navigate every stage of the EPCG journey with confidence and compliance.