EPCG Direct Import Scheme Specialists

Maximize your export potential with duty-free capital goods imports. Our expert consultants help you navigate the EPCG scheme with ease.

What is EPCG Direct Import Scheme?

The Export Promotion Capital Goods (EPCG) scheme allows duty-free import of capital goods for pre-production, production, and post-production activities, subject to an export obligation.

Sl No Particulars Meanings / Definitions
1 EPCG Definition Export Promotion Capital Goods
2 EPCG Purpose To get Technology & Machinery Import which is not available in India.
3 Benefit To avail / get Customs Duty Exemption (All Duty Free).
4 Obligation – SEO Require to fulfil Export Obligation (SEO), 6 Times of Actual Duty Saved.
5 Obligation – AEO In addition to SEO, require to fulfil / maintain Average Export Obligation (AEO) till SEO fulfilled year.
6 Stipulation - Import 24 Months from EPCG Date.
7 Stipulation - Installation Require to submit Installation Certificate within 6 months from the date of import.
8 Stipulation - Export 6 years from EPCG Date (50% during 1-4 Years & balance 50% during 5-6 Years)

Who Can Apply?

  • Manufacturer exporters with or without supporting manufacturer(s)
  • Merchant exporters tied to supporting manufacturer(s)
  • Service providers including Common Service Providers (CSP)
  • Companies in SEZ/EOU/EHTP/BTP/STP units

Required Documents:

  • Valid IEC (Import Export Code)
  • GSTIN Registration
  • Company Registration Documents
  • Bank Details with FIRC
  • Previous Export Performance Records

Financial Implications

Initial Cost:

Government fees for EPCG, certification charges for CA, Chartered Engineer, and consultancy fees + 18% GST.


Liability:

In case of non-fulfillment of Export Obligation within stipulated time including extended period, customs duty along with applicable interest must be paid.

Benefits of EPCG Direct Import Scheme

The EPCG scheme offers numerous advantages for businesses looking to enhance their manufacturing capabilities and export potential.

Zero Customs Duty

Import capital goods completely duty-free, resulting in significant cost savings of up to 25% on your capital investments.

Technology Upgrade

Access to advanced machinery and equipment at reduced costs, enabling technological upgradation and improved production efficiency.

Improved Cash Flow

Reduced initial investment requirements lead to better cash flow management and increased working capital availability.

Enhanced Competitiveness

Lower production costs and improved quality lead to more competitive pricing in international markets, increasing export potential.

Extended Time Frame

Generous 6-year period to fulfill export obligations, providing flexibility in business planning and execution.

Wide Coverage

Applicable to a broad range of capital goods including computer software systems and spares for maintenance.

Eligibility
  • Manufacturer exporters or merchant exporters tied to supporting manufacturers
  • Suppliers of goods to export-oriented units (EOUs)
  • Suppliers to projects under international competitive bidding
  • Exporters with a minimum export performance in preceding years
Benefits:
  • Exemption from payment of Basic Customs Duty, Additional Customs Duty, and Anti-dumping Duty
  • Exemption from payment of Integrated Tax and Compensation Cess on imports
  • Improved cash flow and reduced working capital requirements
  • Enhanced global competitiveness through cost reduction

Follow these steps carefully to ensure smooth import of capital goods under the EPCG scheme.

  • Register EPCG Authorisation with concerned Customs Authority (Port of Import mentioned on EPCG) by executing General Bond (LUT) in prescribed format on ₹ 100 Stamp Paper duly notarised with or without BG. For BG Exemption, you may contact us.
  • Before filing of Bill of Entry (BE) with Customs, please ensure for the correctness of Import Item Description, ITC (HS) Code, Qty, UOM, CIF Value (FC) on Import Invoice, and other relevant documents which should exactly be as per EPCG Authorisation.
  • Get Import clearance from Customs.
  • Bring the Machinery to your Factory Address mentioned in EPCG.
  • Install Machinery. Arrange Installation Certificate. Submit the same to DGFT & Customs within 6 months from the date of import (BE Date).

After importing capital goods, follow these steps to fulfill your export obligation under the EPCG scheme.

  • Manufacture Finished Product for Export by using Imported Machinery against EPCG.
  • Execute Exports duly mentioning Export Product, ITC (HS) Code, EPCG No & EPCG Date on Shipping Bill, which should be exactly as per EPCG.

After fulfilling your export obligation, follow these steps to complete the EPCG process.

  • Apply for Export Obligation Discharge Certificate (EODC) after completion / fulfilment of Export Obligation.
  • On receipt of EODC, approach Customs Dept for "Bond Cancellation" & "BG Release" (if BG executed).

Required Documents for EODC:

  • Installation Certificate
  • ANF-5B Form
  • CA Certificate in prescribed format
  • Copies of Shipping Bills and related documents

Based on our extensive experience with the EPCG scheme, we recommend the following best practices.

  • Better to use / keep some kind of office tool (Customised Software) to keep Import & Export Accountability atleast for Duty Exemption Schemes (EPCG) wherever sizeable EXIM transactions are taking place.
  • Always better to hire "External Agency" to keep 2nd check of EXIM (Scheme related) transactions and also to validate documents of all EXIM Transactions to avoid last movement rush and complications. We suggest you to keep EXIM Audit option on periodical basis. For EXIM Audit you may contact us.
  • Please reach us to get our expertise which will help you with proper Awareness, Guidance, Understanding & Quality Services to have leak proof mechanism to avoid unwanted financial implication on account of Penalty for late filing of Bill of Entry, Detention Charges & Demurrage Charges.