As per the official notification dated on 25th July 2024, the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry (MoCI), has announced significant enhancements the Export Promotion Capital Goods (EPCG) Scheme aimed at simplifying processes, reducing transaction costs and promoting automation to benefit exporters.
- These changes are in line with Government of India (GoI)’s commitment to create a more business-friendly environment and improving India’s manufacturing competitiveness.
- DGFT has made amendments in Chapter 5 of the HandBook of Procedures (HBP) 2023 related to EPCG scheme.
EPCG Scheme: The scheme was introduced on 1st April, 1992, is administered by the DGFT and is governed by the Foreign Trade Policy (FTP) of India. The scheme grants licenses to exporters to import capital goods at a concessional rate of custom duty.
Key Changes:
i.As per the changes, exporters will now have an extended period to submit Installation Certificates (ICs) for imported capital goods. Now, authorization holder is required to upload IC within a period of within a period of 3 years from the date of completion of import.
- The scheme has now allowed Registration Authority (RA) to extend the said period for submission of certificate, up to a valid EO period with a payment of a composition fee of Rs 10,000 per year.
- This extension will help them to reduce pressure on businesses, allowing them to focus more on production and export activities.
Note: Earlier, IC was required to be uploaded within 6 months from the date of completion of import of the item.
- But, in case of import spares, the IC was supposed to be uploaded by the authorisation holder within a period of 3 years from the date of import.
ii.The scheme has introduced a new simplified and reduced composition fee structure for extending the Export Obligation (EO) period.
- This change will help to minimize manual intervention, streamlines compliances, and speed up service delivery.
iii.The scheme has introduced new provision for implementation of all Policy Relaxation Committee (PRC) decisions regarding EO extensions and the regularization of exports with uniform composition fee such as:
- Rs 30,000(for duty saved value of EPCG authorisation issued up to R 2 crores); Rs 60,000 (for EPCG issued for more than 2 crores to 10 crores); Rs 1 lakh (for EPCG issued above Rs 10 crores).
Different Time Line for Extension of EO Period:
i.Request for extension of EO period of 1st block-wise EO period must be made within 6 months from the date of expiry of 1st block EO period along with composition fee such as:
- Rs 5,000(for duty saved value of EPCG authorisation issued up to R 2 crores); Rs 10,000 (for EPCG issued for more than 2 crores to 10 crores); Rs 15000 (for EPCG issued above Rs 10 crores).
ii.Request for extension of EO period, received after 6 months made within 6 years from date of authorisation, along with composition fee such as:
- Rs 10,000( for duty saved value of EPCG authorisation issued up to Rs 2 crores); Rs 20,000 (for EPCG issued for more than Rs 2 crores to Rs 10 crores); Rs 30,000 (for EPCG issued above Rs 10 crores).
iii.Request for extension of EO period beyond 6 years, for regulation purposes shall also be considered by RA along with composition fee such as:
- Rs 15,000(for duty saved value of EPCG authorisation issued up to Rs 2 crores); Rs 30,000 (for EPCG issued for more than Rs 2 crores to Rs 10 crores); Rs 45000 (for EPCG issued above Rs 10 crores).
iv.Incase of extension of EO period beyond 6 years, after two extension from date of expiry, of one year each or two years by the authorisation holder, may be considered by RA concerned with composition fee such as:
- Rs 20,000(for duty saved value of EPCG authorisation issued up to R 2 crores); Rs 30,000 (for EPCG issued for more than 2 crores to 10 crores); Rs 45000 (for EPCG issued above Rs 10 crores).
Key Terms:
i.Installation Certificate (IC): It is an official document that certifies the proper installation and operation status of imported machinery or equipment at specified location.
ii.Export Obligation Period: It is the timeframe within which an importer must fulfill export commitments made under duty exemption or benefit schemes.
- If an importer fails to meet the obligation within the prescribed time frame will result in penalties or repayment of benefits.
- Under EPCG scheme, there are two types of export obligations: Annual Average Export Obligation (AAEO) and Specific Export Obligation (SEO).
About Directorate General of Foreign Trade (DGFT):
Director General (DG)- Santosh Sarangi
Headquarters- New Delhi, Delhi
Established- 1991
