The Advance Authorization (AA), Export Promotion Capital Goods (EPCG), and Duty-Free Import Authorization (DFIA) schemes are essential for reducing import duties and enhancing export competitiveness. These schemes, governed by the Foreign Trade Policy (FTP), allow duty-free or concessional duty imports of raw materials and capital goods for export production. At Pragati Exim Solution, we assist businesses in obtaining approvals, managing compliance, and maximizing benefits under these schemes. Whether you need duty exemptions on raw materials (AA), capital goods (EPCG), or flexible import benefits (DFIA), our expert team ensures seamless documentation, application processing, and regulatory compliance.
The Export Promotion Capital Goods (EPCG) Scheme is a flagship initiative under India’s Foreign Trade Policy (FTP) that allows exporters to import capital goods at zero customs duty, provided they fulfill a specified Export Obligation (EO).The Export Promotion Capital Goods (EPCG) Scheme is a flagship initiative under India’s Foreign Trade Policy (FTP) that allows exporters to import capital goods at zero customs duty, provided they fulfill a specified Export Obligation (EO).
✔Objective: Boost export competitiveness by reducing capital investment costs
✔ Duty Savings: Exemption from Basic Customs Duty (BCD) on imports
✔ Eligibility: Available to manufacturer exporters, merchant exporters, and service providers
🔹 Ideal For: Businesses that require capital goods (machinery, equipment, tools) to manufacture export goods or offer export-related services.
✅ Zero Basic Customs Duty: No duty on imported machinery, reducing manufacturing costs
✅ Export Obligation (EO): Must fulfill a 6x export obligation of the duty saved amount within 6 years
✅ Domestic Procurement Allowed: Capital goods can also be sourced from indigenous manufacturers
✅ Fast-Track Processing: Reduced compliance burden through self-certification for EO fulfillment
✅ Clubbed with Other Incentives: EPCG benefits can be combined with RoDTEP, DFIA, and SEIS (excluding MEIS)
✅ Green Technology Initiative: EPCG covers energy-efficient & environmentally sustainable machinery
Who Can Apply for EPCG?
The EPCG scheme is available for:
✅ Manufacturer Exporters – Who directly produce and export goods.
✅ Merchant Exporters – Sourcing & exporting finished products
✅ Service Providers – Exporting services (e.g. Hotels, tourism operators, hospitals, etc.)
✅ SEZ / EOU / STP / BTP Units – Eligible for EPCG benefits
✅ Common Service Providers (CSPs) – Entities offering export-related services
✅ Deemed Exporters – Who supply capital goods to projects with deemed export benefits.
Major Benefits of the EPCG Scheme
✅ 1. Reduced Capital Investment Costs
Import capital goods without paying Basic Customs Duty (BCD), lowering manufacturing costs.
✅ 2. Flexible Export Obligation (EO)
Exporters must achieve 6x duty saved value within 6 years.
✅ 3. Domestic & Global Procurement Options
EPCG applies to imported machinery & locally sourced capital goods.
✅ 4. Encourages Advanced Technology Adoption
Supports the import of cutting-edge technology & energy-efficient equipment.
✅ 5. Enhances Competitiveness
By reducing capital costs, exporters can offer competitive pricing in global markets.
Export Obligation (EO) Under EPCG
The exporter must fulfill an Export Obligation (EO), which consists of:
- Specific Export Obligation – 6x of the duty saved on imports, to be fulfilled within 6 years.
- Average Export Obligation – Maintain an average export level of the last 3 years.
- Deemed Exports Consideration – Exports to SEZ, EOUs, and projects under FTP qualify.
- Partial EO Relief: If unable to meet EO, partial fulfillment options exist.
- Exemption for Sick Units: Export Obligation waivers are available for companies declared sick by BIFR.
Non-compliance leads to:
- Payment of full duties with interest
- Possible penal action under FTP rules
- EPCG Scheme: Capital Goods & Sectors Covered
| Category | Examples |
|---|---|
| Manufacturing | Machinery, tools, production equipment |
| Service Providers | Hotel equipment, medical devices, telecom infrastructure |
| Infrastructure Projects | Construction equipment, power generation machinery |
| Agro-Based Industries | Food processing machines, packaging units |
Key Challenges & Solutions in EPCG
🔹 1. Difficulty in Fulfilling Export Obligation (EO)
Problem: Exporters may struggle to meet 6x EO in 6 years.
Solution: Pragati Exim Solution helps plan progressive exports to avoid penalties.
🔹 2. Delay in EPCG License Issuance
Problem: Documentation errors, classification issues.
Solution: Expert-led documentation ensures faster processing.
🔹 3. Compliance Burden & Reporting
Problem: Periodic reporting & EO tracking are mandatory.
Solution: We assist in EO compliance monitoring & documentation.
| Feature | EPCG Scheme | Advance Authorization | DFIA |
|---|---|---|---|
| Duty Exemptions | BCD | BCD, IGST, Compensation Cess | BCD only |
| For Capital Goods? | ✅ Yes | ❌ No | ❌ No |
| For Raw Materials? | ❌ No | ✅ Yes | ✅ Yes |
| Export Obligation? | 📦 6x in 6 years | 📦 15%-20% VA | 📦 20% VA |
| Transferability | ❌ Not Transferable | ❌ Not Transferable | ✅ Transferable |
| Ideal For | 🚀Manufacturers & Service Exporters | 🚀 Raw Material Importers | 🚀 Bulk Exporters |
Why Choose Pragati Exim Solution for EPCG Services?
📌 25+ years of Exim consultancy expertise
📌 100% compliance assurance
📌 EO tracking & documentation support
📌 Faster approvals & hassle-free license processing
📞 Need assistance with EPCG? Contact Pragati Exim Solution today! 🚀
- 01 What is the main purpose of the EPCG scheme?
- To allow exporters to import capital goods at zero duty to improve production capabilities.
- 02 Who is eligible for EPCG?
- Manufacturers, merchant exporters, service providers, SEZ, EOUs, and common service providers.
- 03 What is the minimum Export Obligation (EO) under EPCG?
- EO is 6x the duty saved, to be completed in 6 years.
- 04 Can EPCG benefits be used for domestic sales?
- No, EPCG goods must be used for export production.
- 05 Is IGST exempt under EPCG?
- No, only Basic Customs Duty (BCD) is exempt. IGST & GST must be paid but can be claimed as ITC.
- 06 What happens if the EO is not fulfilled?
- The exporter must pay the duty saved amount with interest.
- 07 Is the EPCG scheme applicable to software exporters?
- Yes, EPCG can be availed for IT hardware & software infrastructure.
- 08 Can I buy capital goods domestically under EPCG?
- Yes, goods can be sourced from Indian manufacturers with deemed export benefits
- 09 How do I prove EO fulfillment?
- By submitting shipping bills, BRCs & EO compliance reports.
- 10 Can EPCG be availed for second-hand machinery?
- No, second-hand capital goods are not allowed under EPCG.
- 11 Can an exporter apply for both EPCG & Advance Authorization?
- Yes, but EPCG is for capital goods, while Advance Authorization is for raw materials.
- 12 What are the penalties for violating EPCG conditions?
- License cancellation, duty repayment with 18% interest, and penalties.
- 13 Can we transfer or sell EPCG capital goods?
- No, machinery cannot be sold, transferred, or disposed of until EO is fulfilled.
- 14 Can EPCG duty benefits be clubbed with RoDTEP?
- Yes, but not with MEIS.
- 15 1How can Pragati Exim Solution assist in EPCG?
- We provide end-to-end consultancy, documentation & compliance support.
- 1. What is the Advance Authorization Scheme?
-
Serenity Is Multi-Faceted Blockchain Based Ecosystem, Energy Retailer For The People, Focusing On The Promotion Of Sustainable Living, Renewable Energy Production And Smart Energy Grid Utility Services.
- 2. Who is eligible for the Advance Authorization Scheme?
-
Serenity Is Multi-Faceted Blockchain Based Ecosystem, Energy Retailer For The People, Focusing On The Promotion Of Sustainable Living, Renewable Energy Production And Smart Energy Grid Utility Services.
- 3. What is the EPCG Scheme, and how does it work?
-
Serenity Is Multi-Faceted Blockchain Based Ecosystem, Energy Retailer For The People, Focusing On The Promotion Of Sustainable Living, Renewable Energy Production And Smart Energy Grid Utility Services.
- 4. What is the difference between Advance Authorization and EPCG?
-
Serenity Is Multi-Faceted Blockchain Based Ecosystem, Energy Retailer For The People, Focusing On The Promotion Of Sustainable Living, Renewable Energy Production And Smart Energy Grid Utility Services.