Government Schemes•5 min read

EPCG Scheme

Guidance by StartupFlora

The EPCG Scheme is one of India’s most important export promotion schemes, designed to help exporters import capital goods at zero or concessional customs duty. If you are involved in manufacturing or exporting goods or services, understanding what is EPCG scheme, EPCG scheme benefits, export obligation, GST impact, and documentation is critical.

Benefits of EPCG Scheme

Zero or Concessional Customs Duty

Import capital goods without paying customs duty, reducing upfront investment cost.

Boosts Export Competitiveness

Modern machinery improves productivity, quality, and global competitiveness.

Technology Upgradation

Helps exporters upgrade to advanced technology and modern manufacturing systems.

Lower Cost of Production

Duty savings directly reduce production costs, improving profit margins.

Long Export Obligation Period

Export obligation can be fulfilled over 6 years, giving operational flexibility.

Allows Second-Hand Machinery

Permits import of used capital goods, lowering capital expenditure further.

Supports Service & Manufacturing Exporters

Applicable to manufacturers, merchant exporters, and service providers like IT and hospitality.

EPCG Scheme vs Other Schema

EPCG Scheme

Advance Authorisation Scheme

Duty Drawback Scheme

Purpose

Import capital goods at zero duty

Import raw materials duty-free

Refund of duties on exports

Try of Benefits

Duty exemption on machinery

Duty-free inputs

Duty refund after export

Custom Duty On Import

Nil/ Concessional

Nil

Paid Initially

Export Obligation

Mandatory

Not Applicable

Export Obligation Period

Up to 6 years

Fixed Period

Not Required

Applicable to

Capital Goods

Raw Material

Exported Goods

GST / IGST Impact

IGST exempt on import

IGST exempt

GST refund eligible

Technology Upgradation

Yes

Suitable For

Long-term Exporters

Order Based Exporters

All Exporters

Allow Second Hand Goods

Yes

Long Term Business Impact

High

Medium

Low

Steps to Apply and Comply with EPCG Scheme

Apply for EPCG Licence

Apply online on the DGFT portal with details of capital goods and export plan.

Import Capital Goods

Import machinery or equipment under EPCG licence at zero or concessional customs duty.

Install Capital Goods

Install the imported capital goods at the approved premises and maintain records.

Fulfil Export Obligation

Export goods or services equal to 6 times the duty saved within 6 years.

Close EPCG Licence

Submit export proof and obtain Export Obligation Discharge Certificate (EODC) from DGFT.

Apply for EPCG Licence

Apply online on the DGFT portal with details of capital goods and export plan.

Import Capital Goods

Import machinery or equipment under EPCG licence at zero or concessional customs duty.

Install Capital Goods

Install the imported capital goods at the approved premises and maintain records.

Fulfil Export Obligation

Export goods or services equal to 6 times the duty saved within 6 years.

Close EPCG Licence

Submit export proof and obtain Export Obligation Discharge Certificate (EODC) from DGFT.

Documents Required for EPCG Scheme

Business & Identity Documents

EPCG Licence & Application Papers

Import & Machinery Documents

Installation & Compliance Proof

Export & Closure Documents

How to Apply for EPCG Scheme in India

Register on DGFT Portal

File EPCG Application Online

Obtain EPCG Authorisation

Import Capital Goods

Install Goods & Fulfil Export Obligation

FAQs

EPCG scheme allows import of capital goods at zero duty against export obligation.

IGST on imports is exempted; GST refund on exports is allowed.

Yes, subject to certification and compliance.

Export obligation is 6 times the duty saved, to be fulfilled in 6 years.

Yes, EPCG scheme continues under the current Foreign Trade Policy.

Conclusion

The EPCG Scheme is a powerful export incentive that enables Indian exporters to import advanced capital goods at zero duty, improve efficiency, and expand global competitiveness. Understanding the EPCG scheme meaning, GST implications, export obligation, and compliance is essential to fully utilise its benefits.
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