What is the EPCG scheme?
EPCG stands for Export Promotion Capital Goods. Notified under Chapter 5 of the Foreign Trade Policy and administered by the DGFT, it lets eligible exporters import capital goods — new or (with conditions) second-hand — at zero Basic Customs Duty. IGST and Compensation Cess are exempted as currently notified. In return, the authorization holder undertakes to export goods or services worth a defined multiple of the duty saved.
EPCG is one of India's most powerful production-side incentives: a single authorization can unlock duty savings of 7.5% – 27.5% of the CIF value of machinery, dramatically improving project IRR for export-oriented capacity expansion.
EPCG export obligation explained
The EPCG export obligation has two components that must be tracked separately:
| Obligation | Quantum | Period |
|---|---|---|
| Specific EO | 6× duties + taxes saved on imported CG | 6 years from authorization date |
| Average EO | Average of last 3 years' exports of same/similar product | Year on year, over the EO period |
| Block-wise EO | 50% in Block I (Year 1–4), 50% in Block II (Year 5–6) | Block-wise monitoring by DGFT |
| MSME / Green Tech | Reduced specific EO (75% of standard) | 6 years (same window) |
Always confirm the exact EO quantum against the latest FTP / HBP notifications applicable to your sector before issuance.
Duty-free import benefits
- Zero Basic Customs Duty on capital goods at the import stage.
- Exemption from IGST and Compensation Cess as currently notified.
- Spares, jigs, fixtures, dies and moulds covered up to 10% of CIF.
- Second-hand capital goods permitted subject to conditions.
- Indigenous sourcing also allowed — deemed export benefits to the supplier.
How to apply for an EPCG authorization
- File ANF-5A online on the DGFT portal with digital signature.
- Submit CA / CE certificate on nexus between CG and the export product.
- Execute a bond + bank guarantee (or LUT) with jurisdictional Customs.
- Import the capital goods within 18 months (extendable) and install at the declared premises.
- Maintain block-wise and average EO; file annual EO statements with DGFT.
- Apply for EODC on completion of the EO and redeem the bond/BG.
EODC closure process
The EODC (Export Obligation Discharge Certificate) is the final closure document issued by the DGFT Regional Authority. Without EODC, the bank guarantee filed with Customs cannot be redeemed and the authorization stays open on your IEC.
- Compile shipping bills, BRCs/e-BRCs, GR waivers and bank realization certificates mapped to the authorization.
- Reconcile specific EO (6× duty saved) and average EO year-wise.
- File the EODC application online with appendices and CA certificate.
- Respond to RA queries; produce installation certificate from the jurisdictional Central Excise / Customs / Chartered Engineer.
- Receive EODC, then file for bond / BG redemption with Customs.
Extensions, clubbing & shortfall remedies
Common mistakes that delay EODC
- Average EO not maintained in one or more years of the block.
- Shipping bills filed without the EPCG authorization number / file number declaration.
- Third-party exports not linked correctly through disclaimer.
- Installation certificate not obtained within 6 months of import.
- BRCs not reconciled — leading to mismatch between FOB declared and realized.
How We Design For You helps
Our DGFT practitioners handle EPCG end-to-end — from feasibility and duty-saving calculation to authorization filing, block-wise EO monitoring, extensions, clubbing and final EODC closure with bond / BG redemption. We also align EPCG with other export-benefit schemes such as RoDTEP, Advance Authorization and RoSCTL so a single team manages your entire export-benefit stack.
Frequently asked questions
What is the EPCG scheme?
EPCG (Export Promotion Capital Goods) is a DGFT scheme that allows manufacturers, merchant exporters tied to a supporting manufacturer and service providers to import capital goods at zero Basic Customs Duty against an export obligation. The objective is to upgrade India's production technology and make exports cost-competitive.
What is the export obligation under EPCG?
The EPCG export obligation is 6 times the duties, taxes and cess saved on the capital goods imported, to be fulfilled in 6 years from the date of the authorization. An average export obligation equal to the past 3 years' average exports of the same product must also be maintained year on year, in addition to the specific EO.
What capital goods can be imported under EPCG?
Plant, machinery, equipment, jigs, fixtures, dies, moulds, spares (up to 10% of the CIF value), second-hand capital goods (with conditions), computer systems and software essential for production of the export product, and capital goods for pre-production, production and post-production stages.
What is EODC and how is it issued?
EODC (Export Obligation Discharge Certificate) is the closure certificate issued by the DGFT Regional Authority after the exporter proves that both the specific and average export obligations have been met. EODC is required to redeem the bank guarantee / bond filed with Customs and to formally close the EPCG authorization.
What happens if export obligation is not fulfilled?
Shortfall in EO attracts payment of proportionate Customs duty saved along with 15% interest per annum from the date of import. A composition fee may also apply. Timely monitoring, block-wise extensions and EO redemption strategies (e.g. clubbing of authorizations) can usually prevent default.
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