EXPORT PROMOTION CAPITAL GOOD ( EPCG ) SCHEME
October 09, 2024
EXPORT PROMOTION CAPITAL GOOD ( EPCG ) SCHEME
Objective
The Export Promotion Capital Goods (EPCG) scheme is one of the several export-promotion initiatives launched by DGFT. The core purpose of the scheme is to allow exporters to import machinery and equipment (Capital Goods) at affordable prices so that they can produce quality products using that imported machinery for the competitive export market. The main objective of this scheme is to promote and encourage Exporter to earn more foreign exchange through their export business expansion and modernization.
Benefits of EPCG Authorization:
- Duty-Free Import of Capital Goods: Under EPCG authorization, import of capital goods is allowed without payment of basic customs duty, Promotion of Exports: It aims to enhance export, improving productivity and product quality. Boost to Foreign Trade by facilitating the import of capital goods, the EPCG scheme supports businesses in scaling up production capacities. Flexibility in Utilization: The authorization allows flexibility in utilizing the imported capital goods. Reduction in Import Dependence: It reduces dependency on imported goods by encouraging domestic production using modernized technologies.
Compliances Under EPCG Authorization:
- Export Obligation: Beneficiaries of the EPCG scheme are required to fulfil a specific export obligation, typically 6 times the duty saved on capital goods within a period of 6 years from the date of issuance of the authorization.
- Annual Average Export Requirement: There is an annual average export requirement that needs to be met during the 6-year period. Maintenance of Records: Detailed records of imports, production, and exports related to the EPCG authorization must be maintained and periodically submitted to the DGFT.
- Operational Compliance: Compliance with timely submission of documents such as Annual Progress Reports (APRs) and installation certificates.
- Restrictions: Exporters can sell the imported capital goods only after completion of export obligation & redemption / closer of EPCG Authorization
It necessitates adherence to export obligations and regulatory compliances. The companies who are engaged in Export and Import would like to enhance their business in this for goods and services.