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Why a Chartered Engineer Certificate Is Crucial for EPCG License Compliance
Most exporters figure out the EPCG scheme when the bank or their customs agent mentions it. Zero duty on capital goods sounds attractive. The paperwork that comes with it, less so.
The Chartered Engineer certificate is one document that trips up a surprising number of EPCG applicants — not because it's complicated in itself, but because people underestimate what it's actually certifying, who needs to sign it, and what happens if it's wrong. A deficiency letter from the Regional Authority (RA) of DGFT because of a flawed nexus certificate can delay your authorisation by weeks. A rejected installation certificate means your six-month submission deadline starts looking very close.
This article covers what the CE certificate covers in the EPCG context, where it's mandatory, what the engineer actually checks, and what to look for when choosing one — particularly if you're based in Delhi NCR where both DGFT offices and manufacturing exporters are concentrated.
The EPCG Scheme — A Quick Context
The Export Promotion Capital Goods (EPCG) scheme allows manufacturers and service exporters to import capital goods — machinery, equipment, spares, tools — at zero customs duty. The condition is a specific export obligation: exports equal to six times the duty saved, fulfilled within six years from the authorisation date.
Under FTP 2023, the scheme also covers green technology equipment, and DGFT has introduced automated approvals for straightforward cases. But the core compliance requirements haven't changed — and the CE certificate sits at two critical points in the process.
Where the Chartered Engineer Certificate Is Mandatory Under EPCG
There are two distinct stages where DGFT requires a certificate from an independent Chartered Engineer. Missing either one — or getting either one wrong — creates compliance risk.
1. The Nexus Certificate — Appendix 5A (At Application Stage)
When you apply for an EPCG authorisation in Form ANF 5A, you must attach a nexus certificate from an independent Chartered Engineer in the format prescribed under Appendix 5A of the DGFT Handbook of Procedures.
This certificate does one specific thing: it establishes the technical connection — the nexus — between the capital goods you want to import and the export product or service your business produces. The RA at DGFT will not issue the EPCG authorisation without this certificate.
The Appendix 5A format requires the Chartered Engineer to confirm:
The name, model, technical description, and quantity of each capital good proposed for import
That the capital good is required for pre-production, production, or post-production of the specified export product or service
How the machinery links to the export product — its role in the manufacturing or service delivery process
Anticipated wastage at the time of installation, if any, and that the wastage is reasonable
That the engineer has the necessary competence in the relevant domain to issue this certificate
That last point was formalised by DGFT via a specific public notice: the Chartered Engineer must act only within the domain of their own competence. A mechanical engineer cannot certify electronics manufacturing equipment. A civil engineer cannot sign off on chemical processing machinery. The domain specificity is explicit in DGFT guidelines.
2. The Installation Certificate — Post-Import (Within 6 Months)
Once capital goods are imported under the EPCG authorisation and installed at the factory premises, the authorisation holder must submit an installation certificate within six months from the date of completion of import. This can be obtained from either the jurisdictional Customs Authority or an independent Chartered Engineer — at the option of the authorisation holder.
Most exporters take the independent CE route. It's faster, doesn't require coordinating with Customs, and gives you more control over timing. The CE visits the factory, physically verifies the installed machinery against the Bill of Entry and the EPCG authorisation details, and issues the certificate on their own letterhead.
⚠ Missing the six-month installation certificate deadline is one of the most common compliance failures under EPCG. Late submission attracts a ₹5,000 penalty, and DGFT verifies installation certificates on a random basis. If capital goods are found not installed at the premises mentioned in the authorisation, the duty exemption can be challenged.
A fresh installation certificate is also required if you ever shift machinery from one factory unit to another — and this shift is only permitted if the new address is listed in your IEC and RCMC.
What Happens When the CE Certificate Has Problems
The Chartered Engineer certificate isn't just a formality — it's the technical foundation of the entire EPCG authorisation. A weak or incorrect nexus certificate creates problems throughout the licence lifecycle.
At Application Stage
DGFT RA issues a deficiency letter — the authorisation is put on hold until a corrected certificate is submitted
This delays authorisation issuance, which pushes back your import timeline — the import validity period is 24 months from authorisation date with no revalidation
A poorly established nexus can create complications at the export obligation discharge stage, even if the application was initially accepted
At Export Obligation Discharge (EODC) Stage
When you apply for the Export Obligation Discharge Certificate in Form ANF 5B, DGFT reviews the original nexus certificate. If the exported goods don't clearly match what the CE certified as the export product at application stage, the RA may ask questions. In some situations, an amendment to the authorisation is needed — which itself requires a fresh nexus certificate from a Chartered Engineer.
The Financial Stakes
The penalty structure under EPCG is worth understanding before treating certification quality as a minor concern.
Export obligation not fulfilled within 6 years: Full customs duty saved plus 15% interest per annum payable to Customs.
AEO (Average Export Obligation) shortfall in any year: Customs duty plus 15% annual interest on the shortfall amount.
SEO (Specific Export Obligation) shortfall after completing AEO: Proportionate duty saved plus 15% annual interest.
Machinery found not installed at licensed premises: Duty exemption challenged; confiscation risk under Customs Act, 1962.
Installation certificate not submitted within 6 months: ₹5,000 penalty; DGFT compliance flag on the authorisation.
CE certificate issued by engineer outside their domain: Authorisation validity can be challenged; nexus disputed at EODC stage.
The 15% annual interest rate adds up fast. On a duty saving of even ₹50 lakh, the interest alone can cross ₹45 lakh over six years if the export obligation isn't met. Getting the nexus certificate right from the start isn't about paperwork — it's about protecting that duty saving.
What a Chartered Engineer Actually Does During the EPCG Assessment
Many exporters assume the CE just signs a paper based on what the company tells them. A proper assessment involves real technical work — and the quality of that work matters.
For the Nexus Certificate
Reviews the pro forma invoice or technical specifications of the machinery to be imported
Visits or reviews the existing manufacturing setup to understand the production process
Technically establishes how the imported machinery will be used — at which stage of production, for which export product
Assesses and certifies the wastage percentage at installation, if applicable
Confirms the technical description of the machinery matches what the importer has described to DGFT
Signs and stamps each page of the certificate — Appendix 5A format requires page-by-page attestation
For the Installation Certificate
Physically visits the factory premises specified in the EPCG authorisation
Cross-verifies the installed machinery against the Bill of Entry details — make, model, serial numbers
Confirms the machinery is operational and located at the licensed address
Issues the certificate on their own letterhead — not on the company's letterhead
A copy must also be forwarded to the Customs Authority for their records
A CE who simply takes the company's word on serial numbers and signs off creates a certificate that won't hold up to a random DGFT verification. Customs and DGFT offices have seen enough paper-signing to know the difference.
Choosing the Right Chartered Engineer for Your EPCG Work
Not every Chartered Engineer registered with the Institution of Engineers (India) is the right person for EPCG certification. A few things genuinely matter when choosing one:
Domain competence that matches your machinery. DGFT guidelines explicitly require the CE to certify only within their domain of competence. An engineer from the wrong field gives you an invalid certificate.
Familiarity with Appendix 5A format specifically. The nexus certificate has a prescribed format with specific certifications required. An engineer unfamiliar with DGFT formats may miss required declarations — which triggers a deficiency letter.
EPCG-specific experience, not just general valuation or inspection work. General inspection experience doesn't substitute for knowing what DGFT Regional Authorities actually look for in nexus certificates at the time of processing and later at EODC.
Willingness to conduct an actual site assessment. A CE who issues certificates without visiting your facility or reviewing pro forma invoices is not providing a credible certificate. DGFT verifies on a random basis.
Current IEI registration. Chartered Engineers in India must be registered with the Institution of Engineers (India). Verify this before engagement.
Turnaround time relative to your import window. Import validity under EPCG is 24 months from the authorisation date with no revalidation. Delays in getting the nexus certificate directly affect how much of that window you can use.
Chartered Engineer Service Providers in Delhi — What to Know
Delhi NCR is one of the busiest corridors for EPCG applications in India. Manufacturing clusters in Gurgaon, Faridabad, Noida, Ghaziabad, and the Okhla and Wazirpur industrial areas generate a significant volume of EPCG authorisations. The DGFT Regional Authority offices in Delhi handle a large share of these.
For exporters looking for chartered engineer service providers in Delhi, a few practical observations from how EPCG certification actually works in the NCR market:
The better-established CE service providers in Delhi typically have engineers across multiple domains — mechanical, electrical, civil, chemical — so the domain-matching requirement can be met in-house. Smaller solo practitioners may not have this range.
Proximity to your factory matters, especially for the installation certificate. A CE based in Okhla travelling to certify machinery in Faridabad or Manesar adds travel time to the turnaround — factor this into your six-month window.
For manufacturing sectors common in Delhi NCR — garments, auto components, electronics, pharma, food processing — the CE needs sector-specific experience, not just generic machinery knowledge. The nexus between machinery and export product varies significantly by industry.
Some CE firms in Delhi also assist with broader EPCG compliance — tracking export obligation deadlines, preparing amendment applications, and handling deficiency responses. This end-to-end familiarity can be useful if you're managing multiple EPCG licences simultaneously.
Sapient Services, based in Okhla, New Delhi, provides Chartered Engineer certificates for EPCG nexus certification and installation certificates across Delhi NCR and pan-India for larger assignments. Our team covers mechanical, industrial, and infrastructure domains.
Common Mistakes Exporters Make with the CE Certificate Under EPCG
These come up repeatedly in deficiency letters and EODC complications:
Getting the nexus certificate signed by a CE who isn't in the relevant domain — it looks fine on paper but gets flagged when the RA checks engineer credentials
Describing the export product too broadly — 'engineering goods' when the authorisation needs to specify the exact product line
Importing machinery not listed in the nexus certificate — any addition or deletion to the import list requires a fresh nexus certificate from a Chartered Engineer
Missing the 6-month installation certificate deadline and assuming a small penalty is the only consequence — late installation certificates can complicate EODC processing significantly
Using a CE who issues the certificate on the company's letterhead instead of their own — this violates the format requirement and can invalidate the certificate
Shifting machinery to a different factory unit without submitting a fresh installation certificate — this is one of the most consistently penalised violations under EPCG monitoring
Treating the nexus certificate as a one-time requirement — if you amend your authorisation to add export products, you need a fresh nexus certificate establishing the connection to those products
Getting This Right from the Start
The EPCG scheme is a genuine financial benefit — duty savings on capital goods can be substantial, particularly for manufacturers importing high-value machinery. But the scheme only delivers that benefit cleanly when the compliance chain is managed properly from the nexus certificate through to EODC.
The Chartered Engineer certificate is the first link in that chain. Getting it issued correctly — by the right person, in the right format, with a genuine technical assessment — is not a detail. It's the foundation the entire EPCG authorisation sits on.
If you're preparing an EPCG application or due for an installation certificate submission in Delhi NCR, it's worth a brief consultation with a CE who is specifically experienced in EPCG certification work — before you submit, not after a deficiency letter arrives.
For Chartered Engineer certificates for EPCG in Delhi, contact Sapient Services Pvt. Ltd. — Sapient House S-15, Pocket S, Okhla Phase II, New Delhi 110020.
Key Takeaways
Nexus certificate (Appendix 5A) is mandatory at EPCG application stage. Issued by an independent Chartered Engineer only — in DGFT prescribed format on the engineer's own letterhead.
CE domain requirement — the engineer must certify only within their domain of competence. DGFT made this explicit in a public notice amending the Handbook of Procedures. Wrong domain means an invalid certificate.
Installation certificate is required within 6 months of import completion. It can be from a CE or Jurisdictional Customs — the CE route is generally faster and more practical.
Amendments to the authorisation — any change to the import or export item list requires a fresh nexus certificate from a Chartered Engineer.
Penalty for non-fulfilment — full customs duty saved plus 15% per annum interest if export obligation is not met. Machinery can be confiscated under Customs Act, 1962 if found outside licensed premises.
Choosing a CE in Delhi — match the engineer's domain to your machinery type. Verify IEI registration. Look for EPCG-specific experience, not just general valuation or inspection work.
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