EPCG Scheme (Export Promotion Capital Goods)

What is the EPCG scheme?

The Export Promotion Capital Goods (EPCG) Scheme is a duty exemption scheme under Chapter 5 of the Foreign Trade Policy 2023, administered by the Directorate General of Foreign Trade in the Ministry of Commerce and Industry. According to Para 5.00 of the FTP, the objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhance India's manufacturing competitiveness.

In practical terms, EPCG lets an exporter bring in machinery at zero customs duty instead of paying the full tariff up front, in exchange for a binding promise to export. Capital goods imported for physical exports are additionally exempt from IGST and Compensation Cess leviable under sub-sections (7) and (9) of Section 3 of the Customs Tariff Act, 1975.

What counts as capital goods under EPCG (Para 5.01 of FTP):

• Capital goods as defined in Chapter 11 of the FTP, including in CKD or SKD condition.
• Computer systems and software that form part of the capital goods being imported.
• Spares, moulds, dies, jigs, fixtures, tools and refractories.
• Catalysts for the initial charge plus one subsequent charge.

Items in the negative list at Appendix 5F cannot be imported under EPCG. Where the item is otherwise restricted for import, or the export product is restricted for export, the authorisation is issued only after approval of the Exim Facilitation Committee at DGFT headquarters.

Who is eligible for the EPCG scheme and who cannot apply?

You can apply if you are:

• A manufacturer exporter, with or without supporting manufacturers. The name of each supporting manufacturer must be endorsed on the EPCG authorisation before the capital goods are installed at their premises.
• A merchant exporter tied to a supporting manufacturer.
• A service provider, including a Common Service Provider (CSP) certified by DGFT in a Town of Export Excellence or a PM MITRA park.

You need a valid IEC and an RCMC from the relevant Export Promotion Council. The application in ANF 5A may be filed by the registered office, head office, a branch office or a manufacturing unit of the IEC holder.

You cannot apply, or are not eligible, in these situations:

• You have no export business and no IEC. EPCG is an authorisation issued to an exporting entity, not a personal or household benefit. A private individual cannot use it to import a machine duty free.
• The item is on the Appendix 5F negative list.
• Common utility services, electricity, water, gas, sanitation, sewerage, telecommunication and transportation, are not considered for the Common Service Provider benefit under Para 5.02(b)(i).
• Capital goods for a CSP must be installed within a Town of Export Excellence or PM MITRA park, and the CSP must furnish a Bank Guarantee equivalent to the duty saved.
• Revalidation is not permitted. If you do not import within the 24-month validity, the authorisation lapses.

What is the export obligation and how is it calculated?

EPCG carries two separate obligations, and confusing them is the commonest cause of trouble at redemption.

Specific export obligation is 6 times the duties, taxes and cess saved on the capital goods, to be fulfilled in 6 years from the date of issue of the authorisation. For direct imports, it is reckoned against the actual duty saved; for domestic sourcing, against the notional customs duty on the FOR value shown in the Advance Release Order or invalidation letter.

Average export obligation (AEO) is the arithmetic mean of exports of the same and similar products in the preceding three licensing years. It must be maintained every financial year until the specific obligation is completed. Only exports over and above the AEO count towards the specific obligation.

Block-wise fulfilment is prescribed in Para 5.13 of the Handbook of Procedures:

The authorisation holder must inform the Regional Authority of fulfilment within three months of completing each block.

Reductions available

• Indigenous sourcing: specific EO is 25% less (Para 5.04(d) of FTP).
• Green Technology Products: specific EO is 75% of the normal level (Para 5.10).
• North East Region, Jammu & Kashmir and Ladakh manufacturing units: specific EO is 25% of the normal level (Para 5.11).
• Early fulfilment: where 75% or more of specific EO and 100% of average EO are met in half or less of the original EO period, the remaining obligation is condoned and the authorisation is redeemed (Para 5.09).

Only one of the benefits in Paras 5.04(d), 5.09, 5.10 and 5.11 is admissible, they cannot be stacked.

Exemption from maintaining average export obligation applies to handicrafts, handlooms, KVIC industries, agriculture, aquaculture including fisheries and pisciculture, animal husbandry and dairying, floriculture and horticulture, poultry, viticulture, sericulture, carpets, coir and jute. That exemption does not extend to import of fishing trawlers, boats and ships.

How to apply for an EPCG authorisation

1. Obtain an IEC on dgft.gov.in and an RCMC from your Export Promotion Council or commodity board. Make sure the branch or unit name appears in both.
2. Get a Chartered Engineer nexus certificate in Appendix 5A from an independent Chartered Engineer, confirming the link between the capital goods and your export product. Anticipated fabrication wastage should be certified here too.
3. Log in to dgft.gov.in and open Services > EPCG, then file the application in ANF 5A with the proforma invoice, nexus certificate and the Chartered Accountant certificate of past exports.
4. Pay the application fee: one per thousand of the duty saved amount, subject to a minimum of Rs 500 and a maximum of Rs 1,00,000 under Appendix 2K.
5. Nominate a single port of registration for imports. Exports may be made from any port listed in Para 4.35 of the Handbook of Procedures.
6. Import the capital goods within 24 months of issue. Revalidation is not permitted, so plan shipment schedules against this date.
7. File the installation certificate from jurisdictional Customs or an independent Chartered Engineer within 3 years of completing the import. Extension up to the valid EO period is possible on payment of a composition fee of Rs 10,000 per year.
8. Report block-wise fulfilment to the Regional Authority within three months of the end of each block, and apply online in ANF 5B for the EODC once the full obligation is met.

The entire EPCG filing chain is online. There is no offline or paper route; DGFT's EPCG services menu also covers amendment, revalidation, EO extension, clubbing, transfer and Policy Relaxation Committee requests.

How do I check my EPCG application status?

Log in to dgft.gov.in with your IEC credentials and open the EPCG services dashboard. It shows the file number, authorisation number, duty saved value, specific and average export obligation, exports linked so far, and the EODC status. Shipping bills are linked to the authorisation online, so most of the tracking happens inside the same portal.

Why EPCG authorisations run into trouble

• Average export obligation ignored. Exporters commonly meet the specific obligation but drop below the three-year average in one year, which by itself blocks the EODC.
• Installation certificate not filed within 3 years of completing the import.
• 24-month import validity missed, with no revalidation available.
• Supporting manufacturer not endorsed on the authorisation before installation at their premises.
• Actual user condition breached. Under Para 5.03, imported capital goods remain subject to the actual user condition until the EODC is granted.
• Nexus dispute, the Chartered Engineer certificate does not adequately link the machine to the declared export product.
• First block missed without extension, in which case the holder must pay 50% of the applicable duty proportionate to the unfulfilled first-block obligation within 6 months of the block expiring.

Key dates and recent relief

• 24 months from issue — last date to import against the authorisation.
• 6 years from issue; last date to complete specific export obligation, with 50% due by the end of year 4.
• 3 years from completion of import; last date for the installation certificate.
• 6 months from expiry of the first block; window to seek block extension on composition fee.
• March 2026 relief: DGFT extended export obligation periods for Advance Authorisations and EPCG Authorisations expiring between 1 March and 31 May 2026 up to 31 August 2026, automatically, with no separate application and no composition fee, citing disruption to global shipping routes and logistics corridors.

Companies admitted under the Insolvency and Bankruptcy Code 2016 may be granted relief, concessions and waivers under Para 5.05 of the FTP, in line with the resolution plan approved under Section 31.

Where to get help with EPCG

• DGFT toll-free helpdesk: 1800-111-550 or 1800-572-1550
• DGFT EDI helpdesk email: dgftedi[at]nic[dot]in
• Jurisdictional DGFT Regional Authority listed in Appendix 1A, which issues the authorisation and the EODC
• Policy Relaxation Committee through the DGFT portal, for genuine hardship cases where a timeline has been missed

DGFT has warned exporters about lookalike websites collecting money for services that are free or fee-notified on the official portal. File only on dgft.gov.in.

Common reasons for rejection

Most EPCG rejections happen at the ANF 5A scrutiny stage, before an authorisation is even issued, and are distinct from the post-issuance redemption problems (missed installation certificate, average export obligation shortfall, and so on) that block the EODC later. These are the reasons applications themselves get sent back or refused.

• Nexus certificate does not hold up. The Chartered Engineer certificate in Appendix 5A is supposed to establish a clear technical link between the specific capital goods being imported and the specific export product declared in the application. Regional Authorities routinely query or reject applications where the certificate describes the machine in generic terms, does not name the exact export product, or claims a use for the machine that is broader than what the applicant actually exports. The fix is to get the certificate rewritten with the exact machine specification, the exact export product (matching what appears on the RCMC and past shipping bills), and an explicit statement of how one produces the other.
• RCMC and IEC details do not match the applying branch or unit. ANF 5A can be filed by the registered office, a branch office, or a manufacturing unit of the IEC holder, but the branch or unit name has to appear on both the electronic RCMC and the IEC itself. Applications filed from a branch that is not endorsed on the RCMC get kicked back for correction. Update the RCMC with the Export Promotion Council to add the branch before filing, rather than filing first and hoping it is overlooked.
• Average export obligation base is wrong or unsupported. The Chartered Accountant or Cost Accountant certificate is used to fix the average export obligation from the preceding three licensing years. If the figures in this certificate do not reconcile with the exporter's actual filed export data, or if the applicant has inconsistent or no exports in that base period and has not flagged eligibility for an AEO exemption (handicrafts, handlooms, KVIC industries, agriculture, aquaculture and the other exempted categories), the Regional Authority raises a deficiency query rather than issuing the authorisation outright.
• Item falls in the Appendix 5F negative list, or is otherwise restricted. Some capital goods simply cannot be imported under EPCG regardless of how strong the paperwork is. Where the item or the export product is separately restricted for import or export, the file additionally needs Exim Facilitation Committee approval at DGFT headquarters; applications routed as if this approval is not needed get stuck or refused. Check Appendix 5F and the import/export policy classification of both the capital good and the export product before applying, not after.
• CIF value or duty saved calculation is inconsistent. The proforma invoice or import quotation has to support the CIF value used to compute duty saved, which in turn drives the specific export obligation, the application fee under Appendix 2K, and (where relevant) the Bank Guarantee amount. A quotation that is stale, in the wrong currency basis, or does not match the description on the nexus certificate is a common cause of the file being returned for revision.
• Bank Guarantee or LUT missing where mandatory. This is not universally required, but Common Service Providers and units in Agri Export Zones must furnish it under Para 5.06. Applications from CSPs filed without the Bank Guarantee, or without proof that the capital goods will be installed within a notified Town of Export Excellence or PM MITRA park, are refused rather than queried, since the CSP eligibility condition itself is not met.
• Application filed by an entity with no genuine export track record or business purpose. EPCG is a business authorisation tied to actual or intended export activity through a valid IEC; a shell filing with no supporting manufacturer endorsement, no plausible export product, or no real manufacturing or service linkage does not get past scrutiny.

Where an application is deficient rather than outright rejected, the Regional Authority raises a query on the DGFT portal itself; the applicant re-submits the corrected document against the same file number instead of filing afresh. For a genuine hardship case where a technical rejection has already happened and the underlying business case is sound, the Policy Relaxation Committee route through the DGFT portal is the mechanism to seek relief, not a fresh ANF 5A filing.