EPCG Scheme India: Import Capital Goods at Zero Duty for Export Production

What is the EPCG Scheme?

The Export Promotion Capital Goods (EPCG) scheme allows Indian exporters to import capital goods (machinery, equipment, tools, spares) at zero customs duty — provided they fulfill an export obligation of 6 times the duty saved, over a period of 6 years.

This scheme is governed by Chapter 5 of India's Foreign Trade Policy and is administered by DGFT.

Key Benefits

• Zero Basic Customs Duty (BCD) on capital goods imports
• Significant cost savings — BCD on machinery can be 7.5% to 15%, saving lakhs on expensive equipment
• Covers wide range of goods — Machinery, equipment, tools, jigs, fixtures, moulds, spares up to 10% of CIF value
• Also available for domestic procurement — Buy from domestic manufacturers with deemed export benefits

Eligibility

• Manufacturer exporters — Companies that manufacture and export goods
• Merchant exporters — Traders tied to supporting manufacturers
• Service providers — Including hotels, hospitals, and IT companies that earn foreign exchange
• Valid IEC and RCMC — Must have active IEC and registration with relevant EPC

Export Obligation (EO)

The core condition of EPCG:

• 6 times the duty saved — If you save Rs 10 lakh in duty, you must export Rs 60 lakh worth of goods
• 6-year period — EO must be fulfilled within 6 years from date of authorization
• Annual obligation — Minimum 50% of average EO must be fulfilled in each block of years
• Specific export obligation — Exports must be of products made using the imported capital goods

Application Process

1. Login to DGFT portal — dgft.gov.in → Services → EPCG
2. File ANF-5A — Application form with capital goods details, HS codes, supplier info
3. Submit supporting documents — IEC, RCMC, export plan, quotation for capital goods
4. Pay application fee — Based on CIF value
5. Get authorization — DGFT Regional Authority issues EPCG authorization
6. Import at zero duty — Present authorization at customs during import clearance
7. Install and use — Capital goods must be installed within 6 months of import
8. Fulfill EO — Export the required value within 6 years
9. File EODC — Apply for Export Obligation Discharge Certificate after fulfilling EO

Penalties for Non-Fulfillment

• Proportionate duty recovery — Pay back duty + interest (18% p.a.) proportionate to unfulfilled EO
• Authorization revocation — DGFT may revoke the authorization
• Future restrictions — Difficulty getting new EPCG authorizations

How Eximly Manages EPCG Compliance

Eximly tracks your EPCG authorizations, monitors export obligation progress against each authorization, and sends alerts before annual block deadlines. Our compliance dashboard shows exactly how much EO remains and when EODC can be applied for. Start your free trial today.