Trade Promotions

EPCG Scheme
Advisory Services

Export Promotion Capital Goods Scheme

For exporters investing in capital goods, import duties can significantly increase project cost and affect return on investment. The EPCG scheme allows businesses to import capital goods at concessional or zero customs duty, subject to export obligations. SCS supports businesses in structuring EPCG authorizations, managing compliance, and ensuring smooth execution.

Overview

What is the EPCG Scheme?

The Export Promotion Capital Goods (EPCG) scheme is a Government of India initiative that allows import of capital goods required for production at zero or concessional customs duty. In return, the importer must fulfil an export obligation (EO) over a specified period, typically 6x the duty saved within 6 years.

The scheme is widely used by exporters to expand production capacity, modernize operations, and upgrade technology while reducing upfront capital investment costs and improving competitiveness in global markets.

EPCG requires careful structuring so the export obligation stays realistic, achievable, and correctly documented. Non-fulfilment can lead to duty recovery with interest and penalties. This is where structured advisory from SCS makes a material difference.

Capital Goods Covered Under EPCG
  • Machinery and manufacturing equipment
  • Production tools, jigs, fixtures, and spares
  • Technology upgrades for existing production lines
  • Components and accessories of capital goods
  • Computer systems and software integral to the machinery
  • Second-hand capital goods, subject to conditions
Important Note

EPCG is a high-value scheme, but incorrect export obligation calculation or missed compliance deadlines can result in significant financial exposure. Structured advisory is critical to maximize benefits while managing risk.

Suitable For

Who Should Consider EPCG Advisory?

EPCG is highly relevant for businesses planning capital investment linked to exports, where duty savings can materially improve project viability.

Manufacturers Planning Capacity Expansion

Businesses setting up new production lines or expanding existing capacity where machinery import duty forms a major cost component.

Export-Oriented Units Investing in Machinery

EOUs and export-focused manufacturers importing high-value equipment to support committed or planned export volumes.

Businesses Upgrading Technology

Companies modernizing production with advanced equipment where duty-free import makes technology upgradation financially viable.

Companies with Export Commitments

Exporters with existing or planned long-term export commitments who can comfortably structure and fulfil the associated export obligation.

Key Benefits

What EPCG Delivers for Your Business

A structured mechanism to reduce capital costs while driving export-linked growth for businesses at any stage of expansion.

01

Zero or Reduced Customs Duty on Capital Goods

Import machinery, equipment, and production technology at zero or concessional customs duty, significantly reducing project capital cost.

02

Significant Reduction in Upfront Investment

Duty savings on high-value capital goods directly improve project ROI and free up working capital for other operational needs.

03

Technology Upgradation and Productivity Improvement

Access to the latest international machinery and technology at reduced cost, enabling production efficiency and quality improvements.

04

Improved Global Competitiveness

Lower input costs through duty-free capital goods translate into more competitive export pricing and a stronger position in international markets.

05

Structured Export-Linked Growth Framework

EPCG creates a disciplined framework for aligning capital investment with export targets and driving planned, sustainable export-led expansion.

Process

How the EPCG Scheme Works

A five-step process from authorization to licence closure, structured and managed end-to-end by SCS.

01

Application to DGFT

File the EPCG authorization application with DGFT along with the required documents and investment plan.

02

Licence Issuance

DGFT approves and issues the EPCG licence specifying eligible capital goods and the applicable duty concession.

03

Import at Concessional Duty

Import capital goods against the EPCG licence at zero or reduced customs duty through designated ports.

04

Fulfilment of Export Obligation

Fulfil the specified export obligation over the prescribed period, typically 6x the duty saved over 6 years.

05

Compliance and Licence Closure

Submit EO fulfilment evidence to DGFT and obtain formal closure of the EPCG licence.

Common Pitfalls

Challenges Exporters Face Without Advisory

EPCG is a high-value scheme with complex compliance requirements. Errors at any stage can create significant financial exposure and regulatory risk.

Incorrect Calculation of Export Obligation

Errors in calculating the export obligation multiplier can lead to over-commitment or under-planning, both of which carry financial and compliance risk.

Delays in Licence Application or Approvals

Incomplete or incorrectly structured applications to DGFT can delay licence issuance and disrupt capital procurement timelines.

Misalignment Between Imports and Export Commitments

Importing capital goods without a realistic export plan makes it difficult to fulfil the export obligation within the prescribed timeframe.

Documentation and Compliance Gaps

Poor record-keeping of import documents, shipping bills, and EO evidence creates issues during licence closure and regulatory scrutiny.

Risk of Penalties for Non-Fulfilment

Failure to meet the export obligation within the prescribed period can result in duty recovery with interest and, in some cases, additional penalties.

Missed EO Extension Opportunities

Exporters who are unaware of DGFT provisions for export obligation extension or regularization often miss legitimate compliance relief options.

Our Services

Our Approach to EPCG Advisory

End-to-end structuring and risk-managed execution of EPCG benefits, from feasibility through to licence closure.

Eligibility and Feasibility Assessment

We evaluate your capital investment plan and export capability to determine whether EPCG is the right structure and what export obligation can be realistically fulfilled.

EPCG Authorization Support

We prepare and file the EPCG licence application with DGFT, ensuring all documentation, proforma invoices, and supporting submissions are complete and correctly structured.

Export Obligation Structuring

We accurately calculate the export obligation, map it against your projected export performance, and design a realistic fulfilment plan to minimize compliance risk.

Compliance and Documentation Support

We ensure proper record-keeping of import documents, shipping bills, and EO evidence throughout the licence lifecycle so that closure stays smooth and defensible.

Monitoring and Licence Closure

We track EO fulfilment on an ongoing basis, provide periodic MIS reporting, and assist in formal licence closure with DGFT once the export obligation is met.

Documentation

Documents Required to Get Started

Provide these documents to our team and we will handle the rest, from eligibility assessment to active EPCG licence management.

Import Export Code (IEC)

Project report or capital investment details

Proforma invoices for capital goods to be imported

Export performance details for the last 3 years, if applicable

Audited financial statements

GST registration details and RCMC, if applicable

FAQ

Frequently Asked Questions

The EPCG scheme allows import of capital goods required for manufacturing at zero or concessional customs duty. This reduces upfront capital investment for machinery and equipment, improving project viability and return on investment.
The export obligation is a commitment to export goods worth a specified multiple of the duty saved on capital goods imports. Typically, this is 6x the duty saved and is to be fulfilled over 6 years from the date of licence issuance, subject to the applicable FTP notification.
EPCG is available to manufacturers and merchant exporters with export potential. Applicants must have a valid IEC and a clear plan for using the capital goods in manufacturing export products.
Non-fulfilment of the export obligation can lead to recovery of the customs duty that was exempted along with applicable interest. Penalties may also apply, although DGFT can allow extension or regularization in certain cases.
No. EPCG is suitable only for businesses with a realistic export plan aligned with their capital investment. Availing the scheme without a clear fulfilment strategy can create significant financial exposure.
Why SCS

Why Work with Shangrila Corporate Services

We help businesses convert capital investment into export-driven growth through structured, risk-managed EPCG advisory.

Experience in EPCG Authorizations and Compliance

Our team has hands-on experience managing EPCG licences across sectors, from application and issuance to EO monitoring, extension, and formal closure.

Strong Understanding of DGFT Procedures

We navigate DGFT procedures and documentation requirements with precision, helping applications move forward without unnecessary delays.

Structured Approach to Risk Management

We assess export obligation feasibility upfront, design realistic EO plans, and monitor fulfilment throughout the licence lifecycle.

Focus on Maximizing Benefits While Ensuring Compliance

Our approach is execution-focused, designed to maximize duty savings and investment efficiency while keeping the licence compliant with FTP conditions.

Maximize Your Investment Efficiency with EPCG

Planning Capital Investment for Export Growth?

EPCG can significantly reduce capital costs, but it needs to be structured carefully to avoid compliance risk. Connect with our team to evaluate feasibility, structure your authorization, and manage export obligation effectively.

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