EPCG: Export Promotion Capital Goods

An Advantageous Scheme for Procurement of Capital Goods

  • The import of capital goods (including CKD/SKD thereof as well as computer software systems and spares, jigs, fixtures, dies and moulds) at 0%/3.09% is allowed by the EPCG scheme. Customs duty as against the normal total of 23.895%/20.805%, thus providing a duty saved value of more than 20% of the import value. This is subject to an Export Obligation (EO) comparable to 6/8 times of duty conserved, to be accomplished over a period of 6/8 years reckoned from the date of issuance of license. For bigger projects, SSI etc. there are additional relaxed norms of EO.
  • 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: Until the export obligation is completed, import of capital goods is subject to Actual User Condition.
  • EXPORT OBLIGATION: The export of goods competent of being manufactured or produced by employing of the capital goods imported under the scheme requires to be fulfilled for the export obligation. 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 in spite 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.

FOR MANUFACTURERS

This scheme is quite favorable to Manufacturer exporters as they can import their CG at a substantial discount. Especially or 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 use the scheme for concessional duty import of Capital Goods to be installed at the supporting manufacturers.

FOR PROJECTS

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

To reduce their Capital Cost, a range of service providers/exporters can take EPCG route. Service Providers like Hotels, Hospitals, Tour Operators, Taxi Operators, Construction Companies, Logistics companies can use the scheme to import/procure from domestic market, their capital goods at 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.

FOR OTHERS

Different other sectors like Retail Sector in the country, Port Projects etc. can also utilize EPCG scheme to their advantage.
What A R P A N & Associates LLP Offers

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 associated Government Departments till you finally get the Authorisation.

In case of domestic procurement, we can assist in getting important 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 committees.

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