What is the EPCG scheme?
Posted On May 20, 2021
EPCG, the acronym for Export Promotion Capital Goods is a scheme that boosts the competitiveness of India’s export by helping the country import quality capital goods to produce high quality goods and services.
The Export Promotion Capital Goods Scheme (EPCG) initiated by the Government of India is a part of the Foreign Trade Policy 2015-2020. The scheme allows the import of capital goods for pre-production, production, and post-production at 0% customs duty.
Objectives of EPCG Scheme
The objective of the EPCG (Export Promotion Capital Goods) Scheme is to accelerate the import of capital goods for producing high quality goods and services and enhance the country’s manufacturing competitiveness.
Features of EPCG Scheme
- Manufacturers or Merchant Exporters with supporting manufactures are allowed to import capital goods at 0% customs duty. The authorization holders to enjoy 0% customs duty need to undertake export obligation equivalent to 6 times the amount saved on taxes and duties on capital goods.
- The imported capital goods cannot be sold or transferred until the export obligation is fulfilled.
- The installation of capital goods should be done within 6 months from the date of imports.
- The authorization holders need to file a bond with the customs before the import of capital goods with or without a bank guarantee.
- The EPCG scheme doesn’t cover second-hand goods.
- Exports filing to meet the export obligation have the privilege to take advantage of schemes under Chapter – 3 & Chapter – 4 also.
Export Obligations under Export Promotion Capital Goods Scheme
- To avail of 0% customs duty under the EPCG Scheme, the authorization holder needs to fulfil the export obligation of 6 times of duty saved value in the span of 6 years.
- Firstly, the authorized holder has to fulfill the export obligation for exporting goods or services on the issue of EPCG authorization.
- The export obligation has to be more than the average export level achieved by the applicant in the past 3 licensing years for similar kinds of products.
Coverage of Export Promotion Capital Goods Scheme
- Manufacturer exporters regardless of the presence of supporting manufacturer(s),
- Merchant exporters linked with supporting manufacturers and service providers.
- The scheme also covers service providers who are certified as CSP (Common Service Provider) by the DGFT, State Industrial Infrastructure Corporation or Department of Commerce in subject to provisions and conditions of Foreign Trade Policy 2015-2020.
- Supporting manufacturers shall be endorsed on the EPCG Authorization before installing capital goods in the factory.
- You can apply for the scheme by selecting the head office or registered office, or manufacturing unit or branch office of an eligible exporter to RA concerned in ANF 5A with the documents mentioned.
- RA concerned shall issue EPCG authorization on the basis of the nexus certificate submitted by the applicant is Appendix 5A.
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Eligibility of Capital Goods Under EPCG Scheme
Let’s have a look at the list of capital goods eligible for 0% customs duty.
Any equipment, accessories, plant, or machinery needed for production or manufacturing or rendering services come under capital goods. Eligible capital goods under the EPCG scheme are:
- Any machinery, accessories, plant or equipment. This includes packaging equipment, machinery, machine tools, refrigeration equipment, instruments, equipment needed for R&D, testing, pollution control and quality.
- Dies, tools, spares, fixtures, jigs, moulds and refractories to use in the initial lining.
- Catalysts for the charge.
Capital Goods that are not eligible for EPCG Scheme are:
Thus the beneficial scheme allows you to enjoy duty free import of capital goods. Looking for the best EPCG Licensing Consulting Services in Hyderabad? We are one of the best EPCG consultants with a team that has decades of experience in the industry. We provide valued and flexible DGFT and industrial subsidy services to make the business easier for you.
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Sudheer Varma Vegesna