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An Incentive for early EO fulfillment under EPCG Scheme

An Incentive for early EO fulfillment under EPCG Scheme


Under the Export Promotion Capital Goods (EPCG) Scheme, the authorisation holder shall be maintaining a proper record of the Specific export obligation and average export obligation. The authorization holder should fulfill’ s the specific export obligation over the prescribed block period in the following proportions:
When we talk about the different periods from the date of issue of authorisation, then lets’ figure out the details of block periods. The authorisation holder is required to fulfill at least 50 percent of the whole export obligation within the time period of 1st block (i.e. first four years). On the other hand, the license holder must be in a position to fulfill the balance 50% EO in the second block period (i.e. 5th & 6th year) in case of zero duty EPCG authorisation.

What is the Incentive for early export obligation fulfillment under the EPCG Scheme?

You can go through Para 5.09 under the Foreign Trade Policy (FTP) 2015-2020 to get a better sense of clarity regarding the incentive for early export obligation fulfillment. The Incentive was brought into the picture of export obligation to get a good view of the accelerating exports.
For instance, let’s take an example of an authorisation holder who has fulfilled 75% or more of specific export obligation, not only that but also 100% of Average Export Obligation till date if any, in half or less than half the original export obligation period has been specified, then the remaining export obligation of the license holder gets condoned by the main authority.
The Directorate General of Foreign Trade (DGFT) plays the role of main authority in the process of the export obligation of various goods and services. The authorisation has to be redeemed the EPCG licence by the concerned regional authority.
For units that are located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and J&K, the export obligation shall be 25% of the export obligation. Whereas when we talk about the exporters of green technology products, then the export obligation shall be 75% in that case.


Like any other policy, the incentive has its pros and cons. Before becoming a part of any process of export obligation or any kind of procedure that is related to export obligation, be certain of the fact that you are well informed about every single thing about the process of export obligation and then you can think about the incentive for early export obligation under the EPCG Scheme.
It is always good to be a person with a plan in hand than be someone who knows nothing of the world of export obligation. All the policies that are designed by the respected authority for the exporters are very beneficial for them in the long run. Sometimes what happens in the real-life scenario is that there are a lot of good things waiting out for you but you must have the patience to acquire them. Make sure you take all your decisions wisely.

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Authors Bio:-

Sudheer Varma Vegesna 

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