The Export Promotion Capital Goods (EPCG) Scheme, administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, is a pivotal initiative designed to bolster India's export capabilities. It facilitates the import of capital goods, crucial for manufacturing and service delivery, at zero customs duty. This exemption extends to Integrated Goods and Services Tax (IGST) and Compensation Cess for physical exports, significantly reducing the upfront cost of technology and infrastructure for export-oriented units. The scheme not only supports direct imports but also allows for the procurement of capital goods from indigenous sources, promoting domestic manufacturing and supply chains.
Capital goods covered under the EPCG scheme are broadly defined to include machinery, computer systems and software integral to these machines, and essential spares, moulds, dies, jigs, fixtures, tools, refractories, and catalysts. This comprehensive coverage ensures that exporters have access to the full range of equipment necessary to enhance their production efficiency and competitiveness in global markets. The primary objective is to make Indian goods and services more competitive by enabling exporters to upgrade their production facilities with advanced machinery and technology, thereby fostering economic growth and increasing India's share in international trade.
To avail of these benefits, beneficiaries undertake an Export Obligation (EO), typically six times the duties, taxes, and cess saved on the imported capital goods, to be fulfilled over a period of six years. This obligation ensures that the duty benefits translate directly into increased exports, aligning the scheme's incentives with national trade objectives. The EPCG scheme is open to a wide array of entities, including manufacturer exporters, merchant exporters tied to supporting manufacturers, and service providers, making it a versatile tool for various sectors aiming to expand their global footprint.
