The EPCG Scheme allows Indian exporters to import capital goods at zero customs duty subject to export obligation fulfilment.
EPCG Scheme in India – Complete Guide for Exporters and Manufacturers
The Export Promotion Capital Goods (EPCG) Scheme introduced by the Directorate General of Foreign Trade is one of India’s most beneficial export incentive schemes for manufacturers, exporters, and service providers. The scheme allows businesses to import capital goods at concessional or zero customs duty rates to improve manufacturing capability, modernise production, and increase exports. By reducing the upfront investment cost on imported machinery and equipment, the EPCG Scheme enhances the global competitiveness of Indian exporters while encouraging technological upgradation and production expansion.
What is the EPCG Scheme?
The Export Promotion Capital Goods (EPCG) Scheme enables eligible Indian businesses to import capital goods without paying customs duty, provided they fulfil a prescribed export obligation within a specified period.
The scheme operates under the Foreign Trade Policy (FTP) and is administered by the Directorate General of Foreign Trade.
Under the current Zero Duty EPCG Scheme, exporters can significantly reduce machinery import costs while upgrading manufacturing facilities.
Key Benefits of the EPCG Scheme
1. 100% Customs Duty Exemption
Businesses importing eligible capital goods under an EPCG licence can avail complete customs duty exemption.
Benefits Include:
- Lower upfront machinery investment
- Improved manufacturing capacity
- Increased export competitiveness
- Faster technology adoption
- Higher profitability for exporters
Example
If a business imports machinery with customs duty liability of ₹10 lakh under EPCG, the customs duty payable becomes zero. However, the exporter must fulfil export obligations linked to the duty saved amount.
2. GST / IGST Refund Benefits
Exporters may claim refund benefits on IGST paid for indigenous procurement of capital goods through the GST invalidation process.
Advantages Include:
- Reduced working capital blockage
- Faster recovery of capital investment
- Better cash flow management
Refund processing timelines generally range from 3 to 4 months depending on GST authorities and document verification.
Who Can Apply for EPCG Licence?
The following entities are eligible under the EPCG Scheme:
- Manufacturer Exporters
Businesses manufacturing goods for export using imported machinery. - Merchant Exporters
Merchant exporters associated with supporting manufacturers. - Service Providers
Eligible service providers offering export-related services overseas.
Example
A textile exporter importing a digital printing machine can reduce machinery import costs through the EPCG Scheme while fulfilling export obligations through future exports.
Capital Goods Eligible Under EPCG Scheme
A wide range of machinery and industrial equipment qualify under the EPCG Scheme.
Manufacturing Equipment
- Production plants
- Industrial machinery
- Boilers
- Conveyors
- Textile machinery
- Pharmaceutical production lines
Packaging Machinery
- Automatic packers
- Labelling systems
- Bagging machines
Machine Tools
- CNC machines
- Lathes
- Milling machines
- Precision tooling systems
Testing & Quality Control Equipment
- Laboratory instruments
- Pollution control systems
- R&D equipment
- Emission control devices
Computer Software Systems
Industrial automation software and specialised systems necessary for machinery operations.
Spares, Dies & Fixtures
- Moulds
- Dies
- Fixtures
- Essential production spares
Catalysts
Initial and one subsequent catalyst charge used in manufacturing processes.
Documents Required for EPCG Application
To minimise delays and DGFT queries, businesses should prepare the following documents:
- Import quotations
- Supplier invoices
- Technical specifications
- IEC certificate
- GST registration certificate
- PAN details
- Chartered Accountant certificates
- HS codes of imported machinery
- HS codes of export products
- Export performance records
- Nexus Certificate detailing manufacturing process details
- Bank Guarantee
EPCG Application Process
Step 1: Check Eligibility
Verify whether your business qualifies as a manufacturer exporter, merchant exporter, or service provider.
Step 2: Identify Capital Goods
Prepare machinery specifications and corresponding HS codes.
Step 3: Calculate Duty Saved Amount
Estimate customs duty exemption to determine export obligation.
Step 4: Prepare Supporting Documents
Compile invoices, quotations, technical details, and export records.
Step 5: Submit Application to DGFT
Apply online through the DGFT portal with complete documentation.
Step 6: Obtain EPCG Authorisation
After approval, the EPCG licence allows zero-duty import of authorised capital goods.
EPCG Export Obligation (EO)
Under the EPCG Scheme, businesses must fulfil export obligation linked to the customs duty saved.
Key Points:
- Export Obligation is six times the Duty Saved Amount
- Export obligation must be completed within six years from the date of issuance of EPCG
- EO is over and above average export performance
- New businesses generally have zero average EO
- Failure to complete the Export Obligation will attract fines and penalties from DGFT and Customs.
Annual Reporting Under EPCG
EPCG authorisation holders must submit annual reports to the Regional Authority (RA) before 30th June each year.
Reporting Requirements:
- Details of Exports done in the year
- Shipping Bills
- GST Invoice details
- E-BRCs
- FOB/FOR export values
- Product descriptions
Late filing attracts a penalty of Rs. 5,000 per financial year per authorisation.
EODC Under EPCG Scheme
After completing export obligation, businesses must apply for an Export Obligation Discharge Certificate (EODC).
The EODC confirms successful fulfilment of EPCG obligations and officially closes the authorisation.
Why Businesses Prefer the EPCG Scheme
The EPCG (Export Promotion Capital Goods) Scheme remains one of India's most valuable export promotion incentives for manufacturers and exporters looking to modernise operations while reducing import costs.
Under the EPCG Scheme, businesses can import capital goods at concessional or zero customs duty, subject to fulfilment of export obligations.
Key Benefits of the EPCG Scheme
- Reduction in machinery import costs
- Encouragement for technology upgradation
- Improved global export competitiveness
- Enhanced manufacturing productivity
- Long-term support for export growth
For businesses investing in high-value machinery and equipment, the EPCG Scheme offers significant financial and operational advantages.
Why Choose Unique Group for EPCG Consultancy?
Obtaining and managing an EPCG Authorisation involves technical documentation, DGFT procedures, customs coordination, export obligation tracking, and ongoing compliance management.
At Unique Group, we provide complete DGFT and EPCG consultancy services to help businesses smoothly navigate the entire EPCG lifecycle from licence application to EODC closure.
Our experienced team ensures accurate documentation, faster processing, and reduced compliance risks.
Benefits of Working with Unique Group
- Expert guidance on EPCG eligibility
- Accurate EPCG licence application preparation
- HS Code classification support
- Duty saved calculation assistance
- Export obligation planning and monitoring
- DGFT portal filing support
- Customs clearance coordination
- EODC filing and redemption assistance
- Annual EPCG compliance reporting
- Reduced errors and faster approvals
With professional EPCG consultancy support from Unique Group, businesses can avoid costly compliance issues and focus on operational growth.
EPCG Consultant Services Offered by Unique Group
Unique Group provides specialised EPCG consultancy services across multiple industries including engineering, textiles, pharmaceuticals, chemicals, food processing, and industrial manufacturing.
- EPCG Licence Application: Preparation and filing of EPCG Authorisation applications with DGFT.
- Duty Calculation: Computation of customs duty exemption and export obligation liability.
- HS Code Mapping: Identification and verification of correct HS classifications for imported capital goods.
- Documentation Support: Preparation and review of:
- Supplier invoices
- Nexus Certificates / Technical write-ups
- CA certificates
- Export performance records
- Installation certificates
- And many more
- DGFT Liaison Support: Coordination with DGFT Regional Authorities for:
- Approvals
- Amendments
- Clarifications
- Policy interpretation
- Export Obligation Management: Monitoring and tracking export performance to ensure timely compliance.
- EODC Filing Assistance: Preparation and submission of Export Obligation Discharge Certificate (EODC) applications.
The EPCG Scheme provides a major opportunity for Indian manufacturers, exporters, and service providers to expand operations with modern imported machinery at reduced or zero customs duty.
However, successful EPCG implementation requires:
- Accurate duty calculations
- Proper HS classification
- Timely annual reporting
- Export obligation tracking
- Strong documentation and compliance practices
With extensive experience in DGFT and EPCG matters, Unique Group helps businesses manage the entire EPCG process efficiently, from application filing to successful EODC closure.
Businesses looking for reliable DGFT Consultants and EPCG Consultants can rely on Unique Group for professional guidance, faster processing, and dependable compliance support.
FAQ - EPCG Scheme India
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What is the EPCG Scheme?
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Who can apply for EPCG?
Manufacturer exporters, merchant exporters, and eligible service providers can apply.
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What is export obligation under EPCG?
Export obligation is the mandatory export commitment linked to the customs duty saved under the EPCG licence.
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Is GST refundable under EPCG?
Yes, eligible IGST paid on indigenous procurement may be claimed through GST invalidation procedures.
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What is EODC in EPCG?
EODC stands for Export Obligation Discharge Certificate issued after successful completion of export obligations.
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What happens if annual EPCG reports are filed late?
A penalty of Rs. 5,000 per financial year per authorisation may apply for delayed filing.