EPCG Scheme Enables Duty-Free Import Of Capital Goods To Boost Exports

New Delhi, Apr 13 (KNN) Firms seeking to scale up and expand their footprint overseas are increasingly  turning to Export Promotion Capital Goods (EPCG) scheme.

The scheme allows exporters to import capital goods at zero customs duty to support pre-production, production and post-production activities, with the objective of enhancing export competitiveness.

The EPCG scheme is administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry.

Coverage and Eligibility

The EPCG scheme is applicable to manufacturer exporters (with or without supporting manufacturers), merchant exporters tied to supporting manufacturers, and service providers, including common service providers. Eligible applicants must hold a valid Import Export Code (IEC). 

Applications may be submitted even if the IEC is listed under the Denied Entity List (DEL), but will only be processed after removal from the list. Applications are not permitted if the IEC is cancelled or suspended.

Authorisation holders may also procure capital goods from domestic manufacturers under the scheme. EPCG licences are issued by Regional Licensing Authorities of the DGFT.

Scope of Capital Goods

The scheme covers a wide range of capital goods, mentioned in the chapter 9 of Foreign Trade policy. The goods are required for manufacturing or service delivery, including plant, machinery, equipment and accessories used directly or indirectly in production. 

It also includes packaging machinery, refrigeration equipment, power generating sets, machine tools, catalysts, testing and R&D instruments, and computer software systems.

Capital goods used across sectors such as manufacturing, mining, agriculture, aquaculture, horticulture, poultry, and services are also eligible under the scheme.

Export Obligation Framework

Under EPCG, importers are required to fulfil export obligations over a specified period. Recent provisions allow for proportionate reduction in export obligations for sectors experiencing decline.

The scheme continues to play a key role in enabling technology upgradation, capacity expansion and cost competitiveness for exporters across sectors.

(KNN Bureau)