Export Promotion Capital Goods Scheme

The scope of the Export Promotion Capital Goods Scheme (EPCG) has been enlarged, following the amendments to the EXIM Policy on 25 1996. The major provisions of the scheme are as follows :

Capital goods may be imported with a licence under the Export Promotion Capital Goods Scheme (EPCG). Capital goods (including spares upto 20% of the CIF value of the capital goods) maybe imported at a concessional rate of customs duty according to the conditions given in the table below, subject to an export obligation to be fulfilled over a period of time. The period for fulfillment of export obligation is reckoned from the date of issue of the import licence:

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   DUTY                     EXPORT OBLIGATION         PERIOD
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15% CIF Value             four times CIF value            five yrs

Zero duty (in case
CIF value is Rs. 200      six times CIF value            eight yrs
million or more)

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Export obligation shall be in FOB basis. However, in the case of zero-duty imports, the license holder may apply for the fulfillment of the export obligation by exporting 4 times the CIF value of the capital goods on NFE basis within a period of 8 years.
Under the scheme, manufacturer exporters, merchant exporters, and service providers are eligible to import capital goods.
EPCG licence holders may fulfill their export obligation by supply of intermediate products, but without claiming benefits provided for deemed exports.

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