The EPCG Scheme is a trade facilitation initiative by the DGFT. It allows manufacturer and merchant exporters to import capital goods at 0% customs duty, provided they fulfil a specified EPCG Export Obligation within six years.
The Government of India launched the EPCG Scheme for exporters to modernise India’s industrial base. By allowing the duty-free import of machinery, the scheme enhances the global competitiveness of Indian manufacturers.
Under the Foreign Trade Policy (FTP) 2023, the process has been further streamlined with automated approvals and specialised incentives for green technology.
The Export Promotion Capital Goods (EPCG) Scheme is designed to facilitate the import of high-quality machinery for pre-production, production, and post-production.
The EPCG Application is open to various business entities, provided they have a valid Import Export Code (IEC).
- Manufacturer Exporters: Those who manufacture goods and export them directly.
- Merchant Exporters: Those who export goods manufactured by a supporting manufacturer (the manufacturer’s name must be endorsed on the license).
- Service Providers: Including those in hospitality (hotels), healthcare (hospitals), and logistics.
- Common Service Providers (CSP): Certified entities providing services to exporters in designated “Towns of Export Excellence.”
Under the EPCG scheme, Capital Goods are defined as machinery, equipment, or accessories required for manufacturing goods or rendering services.
Eligible items include:
- Packaging machinery and refrigeration units.
- Power generators and machine tools.
- Equipment for quality control, research, and pollution control.
- Moulds, dies, jigs, fixtures, and refractories.
- Catalysts (initial charge + one subsequent charge).
Filing an EPCG Application is now 100% online through the DGFT portal.
- STEP 1: Online Filing. Log in to the DGFT official website using your DSC (Digital Signature Certificate). Select “Services” and then choose “Online E-Commerce Application.”Click on “EPCG (0%)” to initiate the application process.
- STEP 2: Document Upload. Attach the Pro Forma Invoice, Nexus Certificate (from a Chartered Engineer), and CA certificates.
- STEP 3: Liaison with Customs. Once the EPCG Authorisation is issued, register the license with Customs and execute a Bond/Bank Guarantee.
- STEP 4: Installation Certificate. Within 6 months of import, you must install the machinery and upload an Installation Certificate to the DGFT portal.
- STEP 5: Annual Reporting. File your EO fulfilment reports online by June 30th every year.
Upon successful submission, DGFT will issue the EPCG License.
Exporters must fulfil two types of obligations to maintain the duty-free benefit. Failure to do so results in paying back the saved duty plus interest (15% per annum).
You must maintain the average turnover of the preceding three financial years. This ensures that your existing export performance does not decline after upgrading machinery.
This is the target directly linked to the duty saved.
| Sourcing Method |
Obligation Amount |
Timeframe |
| Direct Import |
6 times the duty saved |
6 years |
| Domestic Sourcing |
25% less than the import obligation |
6 years |
The Foreign Trade Policy 2023 introduced significant updates to streamline the scheme:
- Automated Approvals: Implementation of a rule-based IT system to eliminate manual interface for license issuance and redemption.
- Amnesty Scheme: A one-time Amnesty Scheme was introduced for exporters who defaulted on EO, allowing them to regularise cases without heavy penalties (subject to specific notifications).
- Green Technology: Added incentives for vertical farming, wastewater treatment, and green hydrogen fuel equipment.
Our systematic approach ensures your capital investment remains a benefit, not a liability.
We confirm your export performance aligns with duty-saved targets.
- Reconcile Shipping Bills against the specific EPCG Export Obligation.
- Verify the Installation Certificate is properly recorded with the RA.
We manage the EODC application through the DGFT digital portal.
- Prepare precise Nexus reports linking capital goods to export output.
- Validate e-BRC data to ensure foreign exchange realisation is correctly mapped.
We represent your case to ensure timely certificate issuance.
- Directly address any technical queries or “Deficiency Letters” from the RA.
- Expedite processing within the 30 to 90 day statutory window.
We achieve complete legal discharge of your export liabilities.
- Secure the final Redemption Letter and EODC Certificate.
- Facilitate the cancellation of Bank Guarantees (BG) at Customs.
The EPCG Scheme is a significant financial benefit, allowing Indian exporters to upgrade technology and scale production without the burden of upfront import duties. By removing these capital barriers, the scheme ensures your products remain globally competitive.
However, the key to a successful EPCG License lies in diligent lifecycle management. From the initial nexus certification to the final EODC issuance, every step requires technical precision. At DGFT Guru, we handle the complexities of DGFT EPCG monitoring and compliance, ensuring your duty savings lead to long-term business growth, not legal liabilities.
Managing an EPCG License involves complex documentation and strict deadlines. A single error can lead to a Deficiency Letter or, worse, a heavy penalty from Customs.
As a premier DGFT Consultancy, DGFT Guru simplifies the entire lifecycle:
- Application Precision: We ensure your EPCG Application has the correct “Nexus” to prevent future disputes.
- EO Management: We track your EPCG Export Obligation annually, so you never miss a deadline.
- Fast-track EODC: We handle the “Redemption” process to ensure you get your EPCG Certificate (Closure) without delays.
- Liaisoning: We represent your case before the DGFT and Customs for Bond cancellation.
