#epcg

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What is the Customs Scheme for EPCG?

Scaling your import-export business should seem like a step forward rather than a financial setback. Many manufacturers lock up huge amounts of capital in import tariffs to upgrade their machinery before a single unit is produced or exported. This upfront cost often limits competitiveness or strains working capital at the worst possible time.

The EPCG Scheme is a significant benefit for exporters in this scenario. It allows you to import high-value capital goods at 0% duty, but with a clear expectation that you will drive imports in return. It changes the cost of growth from pay now to perform and grow, making a heavy expense into a structured investment. 

Keep reading as we explore more about the customs scheme for EPCG that turns a costly upgrade into a long-term investment opportunity.

How Does the EPCG Scheme Work?

The EPCG scheme is fundamentally based on a simple balancing act. You save duty today, but you commit to exports later. For example, if you save ₹10 lakhs in import duty, you are expected to manufacture ₹60 lakhs in exports over 6 years. It is a 6x multiplier that ties your growth directly to global markets. 

But it is not a last-minute rush. The timeline is structured so that 50% of your obligation is in the first 4 years and the rest in the next 2 years. However, your export obligation drops by 25% if you source machinery domestically. This makes it even easier to maintain compliance while supporting local manufacturing. 

Who Can Apply for the EPCG Scheme? 

It is important to understand whether your business qualifies before you apply under the EPCG Scheme. As long as they contribute to foreign exchange earnings or meet basic compliance requirements, it is designed to support a large number of exporters, not only manufacturers. Get to know who is eligible here: 

Manufacturer Exporters 

Businesses that make products and export them directly.

Merchant Exporters 

Businesses that export goods made by partner manufacturers.

Service Providers 

Industries like logistics, healthcare, hospitality, etc., that earn foreign exchange.

Important Note

Exporters must have two basic requirements regardless of their classification. A valid Import Export Code and a Registration Cum Membership Certificate. You cannot access the advantages of EPCG without these, so think of them as your entry pass.

What Equipment is Eligible under the EPCG Scheme? 

Here is the breakdown of what equipment is eligible (and can’t) be brought in under the EPCG scheme:

You can import core production assets like packaging machinery, refrigeration units, machine tools, or power generators.

Supporting items such as spares, jigs, dies, and moulds that keep your operations running smoothly.

Second-hand capital goods are also allowed, which is great for reducing upfront investment. 

Regular raw materials or consumables are not eligible since EPCG is only meant for long-term production assets and not daily inputs. 

Are You Balancing Both Export Obligations Under EPCG? 

This is where a lot of exporters make mistakes. They focus on one obligation while completely missing the other. You must meet both the specific EO and the Average EO to retain the duty exemption. 

Specific Export Obligation (EO) 

You must export 6 times the duty saved on your imported machinery.

This is your main obligation under EPCG. You risk paying back the entire duty with interest if you fail to fulfil it. 

Average Export Obligation (AEO) 

You must maintain your past average exports (based on the last 3 years) 

This guarantees that your existing export performance doesn't decline and operates in parallel with your specific EO. 

Your EPCG exports are an addition to what you were previously exporting, not a replacement. Ignoring this is one of the biggest compliance mistakes businesses make.

The Latest 2026 Updates & Relief Measures for the EPCG Scheme 

Global supply chain disruptions and sector-specific export slowdowns have led the government to reassess compliance timelines and obligations under the EPCG Scheme. These updates are designed to reduce the compliance burden on exporters handling uncertain market conditions. Here is what's new in the EPCG scheme for 2026.

Automatic Deadline Extensions

A big relief for exporters if your Export Obligation deadline was falling between March and May 2026. It is now automatically extended to August 31, 2026. There is no extra paperwork or composition fees, and more time to be compliant. 

Relief for Declining Sectors

You are not unfairly penalised if exports in your industry fell by more than 5% in the last financial year. The government allows a proportional reduction in your Average EO to make targets more achievable during difficult market conditions.

100% Paperless Processing

The entire EPCG process, from application to EODC redemption, is now fully online and much more transparent under FTP 2023. 

Conclusion

The EPCG Scheme is an effective way to grow your business without restricting cash flow. But the real value lies in using it strategically while staying compliant with its rules. It helps exporters to upgrade technology or maintain global competitiveness when done correctly. The EPCG scheme is a long-term growth partnership with clear benefits rather than a quick fix.

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Who Can Apply for the EPCG Scheme? Full Eligibility Guide

The EPCG Scheme (Export Promotion Capital Goods Scheme) is one of the most important export incentive schemes introduced by the Government of India under the Foreign Trade Policy (FTP). This scheme plays a crucial role in supporting exporters by allowing them to import capital goods at zero or concessional customs duty, subject to fulfilling specific export obligations.

However, many exporters and business owners still have one major question: Who can apply for the EPCG Scheme? This detailed guide will clearly explain eligibility criteria, types of applicants, conditions, exclusions, and practical examples, so you can easily understand whether your business qualifies for the EPCG Scheme or not.

What Is the EPCG Scheme?

Before understanding eligibility, it is important to briefly understand what the EPCG Scheme is.

The EPCG Scheme allows manufacturers and service providers to import capital goods such as machinery, equipment, or tools required for producing export goods or services without paying customs duty or at a reduced duty rate. In return, the importer must fulfill an export obligation (EO) within a specified period.

The main objective of the EPCG Scheme is to:

Promote exports

Improve product quality

Encourage modernization of technology

Enhance India’s competitiveness in the global market

Who Can Apply for the EPCG Scheme?

The EPCG Scheme is open to a wide range of exporters and service providers. Let’s break this down clearly.

1. Manufacturer Exporters

Manufacturer exporters are one of the primary beneficiaries of the EPCG Scheme.

If you are:

Manufacturing goods in India

Using capital goods such as machinery, plant, or equipment

Exporting the finished products

Then you are eligible to apply under the EPCG Scheme.

Manufacturer exporters can import capital goods either:

Directly, or

Through a supporting manufacturer

📌 Example:A textile manufacturing unit importing weaving machines for exporting garments can apply under the EPCG Scheme.

2. Merchant Exporters (With Supporting Manufacturer)

Merchant exporters can also apply for the EPCG Scheme, but with one important condition.

A merchant exporter must:

Tie up with a supporting manufacturer

Ensure that the capital goods are installed at the supporting manufacturer’s premises

The export obligation must be fulfilled jointly by:

Merchant exporter, and

Supporting manufacturer

📌 Example:A merchant exporter exporting engineering goods can import machinery under EPCG and install it at the factory of the supporting manufacturer.

3. Service Providers

Service providers are also eligible under the EPCG Scheme, provided they earn foreign exchange.

Eligible service providers include:

Hotels

Travel and tourism companies

Hospitals providing medical tourism

IT and IT-enabled services

Logistics and transport services

Educational and training institutes (exporting services)

They must be:

Listed under the Foreign Trade Policy

Earning foreign exchange through services

📌 Example:A hotel importing kitchen or laundry equipment for serving foreign tourists can apply under the EPCG Scheme.

4. Common Service Providers (CSP)

Common Service Providers (CSPs) are entities that provide services to a group of exporters.

They are eligible if:

The capital goods are used for supporting exports

Multiple exporters benefit from the services

📌 Example:A testing laboratory used by multiple exporters for quality certification can apply under EPCG.

5. Manufacturer Exporters With or Without Export History

One of the best features of the EPCG Scheme is that past export performance is NOT mandatory.

New exporters can apply

Existing exporters can apply

No minimum turnover is required

This makes the EPCG Scheme extremely useful for startups and first-time exporters.

Eligibility Conditions Under the EPCG Scheme

To apply for the EPCG Scheme, applicants must meet the following conditions:

1. Import of Capital Goods Only

Only capital goods are allowed under the EPCG Scheme.

Capital goods include:

Machinery

Plant and equipment

Tools, jigs, and fixtures

Spares (up to permitted limits)

Computer systems and software (in specific cases)

❌ Raw materials and consumables are not allowed.

2. Actual User Condition

Capital goods imported under the EPCG Scheme must be:

Used by the applicant or supporting manufacturer

Not sold, leased, or transferred until export obligation is fulfilled

This ensures that the benefit is used only for export promotion.

3. Export Obligation (EO) Requirement

Every EPCG authorization comes with an export obligation, which is usually:

6 times the duty saved (unless otherwise specified)

The EO must be fulfilled within:

6 years from the date of authorization

Failure to meet EO may result in:

Payment of duty saved

Interest and penalties

4. Installation of Capital Goods

Capital goods must be:

Installed at the declared premises

Installation certificate submitted to DGFT or customs authorities

This is a mandatory compliance requirement.

Who Is NOT Eligible for the EPCG Scheme?

Not everyone can apply under the EPCG Scheme. The following are not eligible:

Traders with no manufacturing or service export activity

Importers using capital goods for domestic sales only

Businesses involved in prohibited or restricted exports

Applicants failing to meet export obligation conditions

Read More - India–UAE CEPA Explained: Meaning, Benefits, and Impact

Documents Required for EPCG Scheme Eligibility

To apply for the EPCG Scheme, applicants generally need:

Import Export Code (IEC)

GST registration

PAN card

Chartered Engineer certificate (for capital goods)

Export performance details (if available)

Installation certificate

Bank certificate and financial documents

Benefits of EPCG Scheme for Eligible Applicants

If you are eligible, the EPCG Scheme offers several advantages:

Zero or concessional customs duty

Reduced cost of capital investment

Access to modern technology

Improved export competitiveness

Support for business expansion

Practical Examples of EPCG Scheme Eligibility

Example 1: Manufacturing Unit

A pharmaceutical company imports advanced production machinery and exports medicines. Eligible under EPCG Scheme.

Example 2: Service Exporter

A hospital importing MRI machines for foreign patients. Eligible under EPCG Scheme.

Example 3: Merchant Exporter

A merchant exporter importing machinery for a supporting manufacturer exporting auto parts. Eligible with conditions.

Common Mistakes to Avoid While Applying

Importing non-capital goods

Missing installation deadlines

Poor export obligation planning

Incorrect declaration of premises

Ignoring compliance timelines

Avoiding these mistakes ensures smooth approval and benefits under the EPCG Scheme.

Conclusion

The EPCG Scheme is a powerful incentive designed to help Indian exporters and service providers grow globally. Whether you are a manufacturer exporter, merchant exporter, or service provider, understanding who can apply for the EPCG Scheme is the first step toward availing its benefits.

If your business involves exports and requires capital goods, the EPCG Scheme can significantly reduce costs and improve competitiveness—provided you meet the eligibility criteria and fulfill export obligations responsibly.

FAQs –

1. Can a new exporter apply for the EPCG Scheme?

Yes, new exporters with no previous export history can apply under the EPCG Scheme.

2. Are service providers eligible for the EPCG Scheme?

Yes, service providers earning foreign exchange and listed under the Foreign Trade Policy are eligible.

3. What happens if export obligation is not fulfilled?

If export obligation is not fulfilled, the applicant must pay the duty saved along with interest and penalties.

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EPCG & EODC Consultants in India | Kireeti Consultants

Navigating the world of import-export can feel like a complex puzzle, especially when it comes to securing licenses and handling documentation for high-stakes schemes like EPCG and EODC. EPCG full form is Export Promotion Capital Goods & EODC full form is Export Obligation Discharge Certificate.

At Kireeti Consultants, we specialize in making this process seamless, helping businesses PAN India and beyond import duty-free machinery and raw materials to supercharge your export potential.

Contact Us : Kireeti Consultants

Imagine importing state-of-the-art machinery for your manufacturing unit or sourcing premium raw materials without the burden of customs duties, that's the power of EPCG. This government-backed scheme lets exporters bring in capital goods at zero or reduced duty, provided they meet export obligations within a set timeframe. But getting it right? That's where the real challenges are: complex applications, precise documentation, and timely EODC submission to close out your obligations.

We've guided countless clients through this, from textile firms importing spinning machinery to engineering giants sourcing raw materials like steel alloys. Our team handles everything: EPCG license applications, customs clearance, export obligation tracking, and EODC certifications. No more sleepless nights over DGFT portals or missed deadlines. We ensure compliance with all import-export regulations, minimizing risks and maximizing savings.

Why choose Kireeti Consultants? We're not just paperwork pushers; we're your strategic partners. With years of hands-on experience in EPCG-EODC, we deliver fast approvals, error-free documentation, and personalized advice tailored to your sector, be it machinery imports for automation or raw materials for agro-processing. Our clients speak about our quick turnaround and deep knowledge of evolving trade policies.

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EPCG Amendment Services in India | Duty-Free Imports – Kireeti Consultants

If the import export business involves the Indian market, you may have already heard of the EPCG Amendment rules. However, if not, Kireeti Consultants will assist in getting the paperwork required for the Export Promotion Capital Goods (EPCG) scheme so that capital goods can be imported at zero customs duty. The scheme allows the import of products that help in export production.

Contact Us : Kireeti Consultants

Under the EPCG Amendment, foreign machinery and quality raw materials can be imported with minimal duties, provided the exporter fulfills export requirements within six years. Whether you're dealing with textiles, agricultural products, food processing, or manufacturing, our professionals assist with each aspect, right from DGFT application to duty exemption certificates, as well as monitoring of exports. No power disruptions or export-import issues anymore.

Why Choose Kireeti Consultants? With decades of expertise in the domain of import and export license acquisition, we provide faster approvals and maximize gains. The EPCG Amendment relaxations facilitate the installation period for machinery and the sourcing of raw materials for small-scale enterprises to expand in the free trade regime. Our customized document preparation solutions include all the necessary areas such as Bill of Entry approvals and discharge of export obligations.

Leverage the duty-free facilities available for sophisticated machinery and raw materials. Partner with Kireeti Consultants to easily comply with EPCG and fuel your exports. Contact us now to accelerate your import-export success.

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Understanding the EPCG Scheme: A Simple Guide for Indian Export Businesses

Let’s understand the EPCG Scheme in brief and see how it helps businesses import machinery at lower cost.

If you are planning to import capital goods, machines, spare parts or consumables for manufacturing of a product or services, out of which some portion of such product or services will also be utilized for exports, then in such cases you can opt for EPCG scheme (Export Promotion Capital Goods) Scheme. This government scheme helps exporters save money by allowing them to import capital goods at zero import duties (IGST is also exempted), provided they agree to export certain production of resultant product in a period of 6 years.

Now let's see the Benefits of the EPCG Scheme

The biggest advantage of EPCG is the duty saving. Importing machinery is expensive, and customs duty increases the cost further. EPCG reduces this burden and makes it easier for businesses to upgrade or expand. It is not limited to manufacturing—service businesses like hotels, hospitals, logistics companies, and IT service providers can also benefit. Export obligations can even be completed through third-party exports, which gives exporters more flexibility.

If in case the export obligation is not fulfilled, then there are no penalties. The importer just have to repay the duty saved amount along with 15% per annum simple interest. Partial export obligation fulfilment is also allowed. Moreover, the export obligation period can be extended up to 8 years with payment of nominal composition fees on unfulfilled portion of export obligation.

The EPCG scheme is also available for local procurement of capital goods. In such case the GST amount paid on such procurement will be refunded back to the recipient of capital goods.

Who Can Apply Under EPCG

EPCG can be applied by manufacturers, traders tied to supporting manufacturers and also by service providers. EPCG is a great support scheme for manufacturers and service providers who plans to do export business in future.

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Redemption of EPCG License in India

The procedure for EPCG License Redemption and documentation required in EODC and CA/CE certificates, and also how to close your export oblig

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EPCG Registration- A Step by step Guide for Indian Exporters

Understand about EPCG Registration for exporters in India. Find out eligibility, benefits, documentation, and step-by-step process to avail