EPCG: EXPORT PROMOTION CAPITAL GOODS
| An advantageous scheme for
procurement of Capital Goods
- The EPCG scheme allows import of capital goods (including CKD/SKD
thereof as well as computer software systems and spares, jigs,
fixtures, dies and moulds) at 3% Customs duty as against the
normal total of 25.852%, thus providing a duty saved value of more
than 22% of the import value. This is subject to an Export
Obligation (EO) equivalent to 6/8/12 times of duty saved, to be fulfilled
over a period of 8/12 years reckoned from the date of issuance of
license. For large projects, SSI etc. there are more relaxed norms
- The scheme covers manufacturer exporters with or without
supporting manufacturer(s) / vendor(s), merchant exporters tied to
supporting manufacturer(s) and Service Providers.
- Actual user conditions: Import of capital goods are subject to
Actual User condition till the export obligation is completed.
- Export obligation: The export obligation needs to be
fulfilled by the export of goods capable of being manufactured or
produced by the use of the capital goods imported under the scheme.
In addition upto 50% of the EO can also be fulfilled by any
alternate product of the company or even group company. Deemed
Exports like supplies to Power Projects, Projects funded by
WB/ADB/JBIC etc, EOUs etc. can also be utilized to fulfill the EO
- Indigenous Sourcing: A person holding an EPCG license may
source the capital goods from a domestic manufacturer instead of
importing them. The domestic manufacturer supplying capital goods to
EPCG license holders shall be eligible for refund of Excise Duty
paid by him. In addition the indigenous supplier can import his own
raw material duty free and other benefits which can be discussed.
The scheme is quite beneficial to Manufacturer exporters
as they can import their CG at a substantial discount. Especially for those
manufacturers whose final product is not excisable or is exempt from excise
duty (like those in Uttaranchal) since they cannot take the CENVAT credit of
the CVD paid on imports and Excise Duty paid in Domestic markets.
Merchant Exporters tied with the
supporting manufacturers can also utilize the scheme for concessional duty
import of Capital Goods to be installed at the supporting manufacturers.
EPCG can be taken for the full projects where exports of
goods or services can be envisaged by the use of the project or alternative
products. This can be taken for Captive Power units also. EPCG can be taken
along with Project Import scheme in case of new Projects.
For Service Provider
Various service providers/exporters can take EPCG route
to reduce their Capital Cost. Service Providers like Hotels, Hospitals, Tour
Operators, Taxi Operators, Construction Companies, Logistics companies can
utilize the scheme to import/procure from domestic market, their capital
goods at a substantially reduced costs. The EO can be fulfilled by Forex
Earnings through providing services, like that of Foreign Guests staying in
the hotel, medical tourism etc.
Certain other sectors like Retail Sector in the country,
Port Projects etc. can also utilize EPCG scheme to their advantage.
WHAT WE DO
We can assist you in assessing the feasibility of the
scheme for your exports/domestic supplies, planning for maximum benefits,
documentation, application preparations, representation and coordination
with DGFT and other concerned Government Departments till you finally get
In case of domestic procurement we can assist in getting necessary
invalidations from the authority, and the refund of Excise Duty.
Later we will assist you in redemptions of the Authorization.
We also take matters of clarifications/relaxations etc. from the DGFT