EPCG Scheme was launched in the 1990s to facilitate import of capital goods with the aim to enhance the production quality of goods and services, thereby, increasing India’s international manufacturing competitiveness. This is a scheme relating to import of capital goods at Zero duty. The benefit of zero duty is subject to fulfilment of export obligations and other conditions.
To facilitate import of capital goods for producing quality goods and services to enlarge India’s Export competitiveness.
1. Import capital goods by enjoying the zero duty benefit first and then fulfil the export obligation conditions within the stipulated period. This is called Pre-Export EPCG
2. Post Export EPCG:Under this, capital goods are imported first by paying import duty, then remission (refund)of import duties is claimed after fulfilling export obligation.
3. EPCG Scheme for capital goods purchased in India.
Capital Goods defined: ‘ Means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services,including those required for replacement, modernization, technological upgradation or expansion. It includes packaging machinery and equipment , refrigeration equipment, power generating sets, machine tools, equipments and instruments for testing, research and development, quality and pollution control Capital goods may be for use in Manufacturing, Mining, Agriculture, Aqua culture, Animal husbandry, Floriculture, Horticulture, Pisciculture, poultry, sericulture and viticulture as well as for use in services sector.
BENEFIT FROM EPCG SCHEME:
What are other Schemes to Promote Export?
Merchandise Exports from India Scheme:
MEIS was introduced in the Foreign Trade Policy (FTP) 2015-20, under MEIS, the government provides duty benefits depending on product and country.
Service Exports from India Scheme:
It was introduced in April 2015 for 5 Years under the Foreign Trade Policy of India 2015-2020.
Earlier, this Scheme was named as Served from India Scheme (SFIS Scheme) for Financial Year 2009-2014.
DOCUMENTS REQUIRED FOR EPCG LICENSE:
Director General of Foreign Trade (DGFT), The licensing authority is the issuing authority. The following documents must be self-certified and attached to the DGFT portal:
How to apply for an EPCG License online?
The Applicant should submit an online application to DGFT to get EPCG License.
Please find steps below:
Fill all the details and upload the necessary documents.
CAPITAL GOODS NOT ELIGIBLE UNDER THE SCHEME :
1. Second hand goods
2. Capital goods including captive power plants and generator sets
(i)Export of electrical energy
(ii) Supply of electrical energy under deemed export
(iii) Use of energy in own unit
(iv) Supply/ export of electricity transmission services
What are the export turnovers included to count Export obligation?
1.Goods exported under AA, DFIA, DBK/ Reward schemes.
2.Turnover of physical exports and supplies under specified deemed exports (say EOU/STP/EHTP etc.)
3.Forex received for R&D services and royalty payments
4. INR (Rupees) received for specified services.
The authorisation holders under the EPCG scheme need to file a bond with or without bank guarantee with the customs before the import of capital goods. The bank guarantee should be equivalent to 100% of the differential duty (for merchant exporters) and 25% (for manufacturer exporters) to fulfil the specified export obligation. The bank guarantee will also secure the interest of the revenue.
VALIDITY PERIODS OF AUTHORIZATION:
ii) Advance Authorization
iii) DFIA and replenishment authorization for gems and jewellery
|Export of SCOMET items||24 months|
|Import authorization for restricted items||18 months|
|Deemed exports||12 months or coterminous with contracted duration of project authorization whichever is more|
PENALTY IN CASE OF NON COMPLIANCE:
In cases where the licence holder under the EPCG scheme fails to fulfil the stipulated export obligation then the licensee shall be liable to pay the customs dues along with 15% interest per annum to the customs authority.