Specific and Average Export Obligation under EPCG scheme
As explained above, the Capital goods are allowed to be imported Duty free based on the Export Obligation condition. Export Obligation means that the exporter needs to export “finished goods” manufactured using the capital goods imported under EPCG scheme. There are 2 types of Export Obligation that needs to be fulfilled.
Specific export obligation:
Specific export obligation is calculated as six times the duty saved amount. You must fulfill a minimum of 50% of export obligation in each block of years, i.e., the first block being the first 4 years and the second block is of the remaining 2 years
Annual average export obligation:
The export obligation is over and above, the average level of export achieved by you as an authorisation holder in the preceding three licensing years for the same and similar products within the overall export obligation period including the extended period (if any). Such average would be the arithmetic mean of export performance in the previous three years for the same and similar products. If your company is a new establishment then your Annual average export obligation would be zero.
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