Export Promotion Capital Goods Scheme

The Directorate General of Foreign Trade under the Ministry of Commerce and Industry administers the EPCG Scheme, which allows the import of capital goods (except those specified in the negative list in Appendix 5F) for pre-production, production, and post-production activities at zero customs duty. Capital goods imported under an EPCG Authorisation for physical exports are also exempt from IGST and Compensation Cess leviable under sub-sections (7) and (9) of Section 3 of the Customs Tariff Act, 1975, as notified by the Department of Revenue. Alternatively, the authorisation holder may procure capital goods from indigenous sources in accordance with the provisions of paragraph 5.07 of the Foreign Trade Policy (FTP).

Capital goods for the purpose of the EPCG scheme shall include:

1. Capital Goods as defined in Chapter 11 including in CKD/SKD condition thereof;
2. Computer systems and software which are a part of the Capital Goods being imported;
3. Spares, moulds, dies, jigs, fixtures, tools & refractories; and
4. Catalysts for initial charge plus one subsequent charge.

• Import under EPCG Scheme shall be subject to an Export Obligation (EO) equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.
• Import/procurement under EPCG scheme shall also be subjected to Average Export Obligation (AEO) as given in para 5.04(c) of FTP.
• Authorisation shall be valid for import for 24 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted.
• In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.
• Import of items which are restricted for import shall be permitted under EPCG Scheme only after approval from Exim Facilitation Committee (EFC) at DGFT Headquarters.
• If the goods proposed to be exported under EPCG Authorisation are restricted for export, the EPCG Authorisation shall be issued only after approval for issuance of Export Authorisation from Exim Facilitation Committee (EFC) at DGFT Headquarters.
• EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service providers. Name of supporting manufacturer(s) shall be endorsed on the EPCG Authorisation before installation of the capital goods in the factory / premises of the supporting manufacturer(s). In case of any change in supporting manufacturer(s), the RA shall intimate such change to jurisdictional Customs Authority of existing as well as changed supporting manufacturer(s) and the Customs at port of registration of Authorisation

<br>