Export Promotion Capital Goods (EPCG) scheme

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Recently ,the Government has relaxed various procedures under the Export Promotion Capital Goods (EPCG) scheme in order to reduce compliance requirements and facilitate ease of doing business.

Major Changes 

• The changes include those related to annual reporting of EO (export obligation) — instead of by April 30 each year, exporters can file that by June 30 of each year with specified information, but any delay will be subject to a late fee of Rs 5,000.
• Requests for export obligation extension should be made within six months of expiry instead of the earlier prescribed period of 90 days. 
  • However, applications made after six months and up to six years are subject to a late fee of Rs 10,000 per authorisation.

About  Export Promotion Capital Goods (EPCG) Scheme

• The Zero duty EPCG Scheme is available to exporters of electronic products. 
• It allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at zero% customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date.
• Features 
  • The concessional 3% duty EPCG Scheme allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at 3% customs duty, subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue-date.
  • The capital goods shall include spares (including refurbished/reconditioned spares), tools, jigs, fixtures, dies and moulds. Second hand capital goods, without any restriction on age, may also be imported under the EPCG Scheme. The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA, provided the realisation is in free foreign exchange.
• Aims 
  • It aims to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness. 

Source:BS