If you’re an exporter planning to import machinery or capital goods, the EPCG Scheme can significantly reduce your costs.

Introduced by the Directorate General of Foreign Trade, the EPCG Scheme allows duty-free or concessional import of capital goods, subject to export obligations.

In this guide, we’ll cover eligibility, benefits, process, documents, and compliance requirements—everything you need to know.

What is EPCG Scheme?

The Export Promotion Capital Goods (EPCG) Scheme enables exporters to import capital goods such as:

Machinery

Equipment

Tools

Technology

zero or reduced customs duty, provided they fulfill export obligations within a specified period.

Key Benefits of EPCG Scheme

✅ 1. Duty-Free Import of Capital Goods

You can import machinery without paying customs duty, reducing upfront investment.

✅ 2. Boost in Export Competitiveness

Lower production costs help you compete better in international markets.

✅ 3. Supports Business Expansion

Ideal for manufacturers and service exporters looking to scale operations.

✅ 4. Long-Term Export Benefits

EPCG encourages sustained exports through structured obligations.

Who is Eligible for EPCG Scheme?

The EPCG Scheme is available to:

Manufacturer exporters

Merchant exporters tied to supporting manufacturers

Service providers (hotels, logistics, etc.)

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Export Obligation Under EPCG

To avail benefits, you must fulfill export obligations (EO):

Typically 6 times the duty saved

To be completed within 6 years

Documents Required for EPCG License

Prepare these documents:

Import Export Code (IEC)

GST registration

PAN card

Business registration proof

Proforma invoice for machinery

Bank certificate

Step-by-Step Process to Apply for EPCG License

Step 1: Check Eligibility

Ensure your business qualifies under EPCG.

Step 2: Prepare Documentation

Gather all required documents.

Step 3: Apply via DGFT Portal

Submit your application online through DGFT.

Step 4: Get EPCG License Issued

Once approved, you can import capital goods.

Step 5: Fulfill Export Obligation

Track and complete your export targets within the timeline.

Common Mistakes in EPCG Application

Incorrect documentation

Miscalculation of export obligation

Not tracking compliance timelines

Lack of proper planning

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EPCG vs Other Export Schemes

Exporters often confuse EPCG with incentive schemes like:

RoDTEP Scheme

RoSCTL Scheme

EPCG = Import benefit (capital goods)

RoDTEP/RoSCTL = Export incentives (rebates)

To understand export benefits in detail, check this guide:

Importance of Export Documentation

Many EPCG applications fail due to documentation errors.

To understand export documentation and compliance processes, refer here:

FAQs – EPCG Scheme

1. What is the validity of EPCG license?

Typically valid for fulfilling export obligation within 6 years.

2. Can service providers apply for EPCG?

Yes, eligible service exporters can apply.

3. What happens if export obligation is not met?

You may have to pay duty along with interest and penalties.

4. Is EPCG better than other schemes?

It depends on your business needs—EPCG is ideal for capital goods import.

Conclusion

The EPCG Scheme is a powerful tool for exporters looking to reduce costs and expand operations.

However, success depends on:

Correct application

Proper documentation

Timely compliance