EPCG (Export Promotion Capital Goods Scheme) is an export promotion scheme under India’s Foreign Trade Policy. It allows eligible exporters to import capital goods at zero customs duty for producing goods or services for export, subject to the scheme’s conditions.
The main purpose of EPCG is to help businesses upgrade their machinery and production capacity at a lower initial cost. In return, the exporter must meet a prescribed export obligation within the applicable period.
How It Works:
- Exporter applies for EPCG authorization.
- Eligible capital goods are imported at zero duty.
- Goods are used for export production.
- Exporter completes the required export obligation.
- Compliance is reported to DGFT.
Benefits:
- Reduces the cost of imported machinery
- Supports technology and equipment upgrades
- Improves production capacity
- Helps make exports more competitive
Example:
An Indian manufacturer imports a machine worth ₹50 lakh under EPCG at zero customs duty and uses it to produce goods for export while meeting the required export obligation.