How to Leverage the EPCG Scheme to Import Capital Machinery at Zero Customs Duty
Introduction
To compete with global suppliers, Indian manufacturing units must modernize plant infrastructure and adopt state-of-the-art machinery. However, high customs duties on imported technology often impose significant liquidity burdens.
Under the Foreign Trade Policy (FTP), the government provides the EPCG (Export Promotion Capital Goods) Scheme—a strategic instrument empowering manufacturers to import capital machinery at 0% basic customs duty in exchange for targeted export output.
The Two Pillars of Export Obligation
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1. Specific Export Obligation (EO): The manufacturer must export goods equivalent to 6 times the actual customs duty saved, completed over a 6-year window from the license issuance date.
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2. Average Export Obligation: In addition to the specific obligation, the enterprise must maintain its baseline annual export performance (average of the past 3 financial years).
Lifecycle of an EPCG License
| Phase | Milestone | Core Documentation & Action | |
| Phase 1 | Application & Grant | Filing application on DGFT portal, duty computation, CA & CE capital project validations. | |
📌 Compliance Warning: Failure to fulfill export obligations within the stipulated 6 years attracts customs demand notices with high compound interest penalties. Meticulous tracking from Day 1 is vital.
How Siddhi Creation & Services Delivers Value
From calculating project viability and filing applications with DGFT to managing installation certificates and securing your final Export Obligation Discharge Certificate (EODC), Siddhi Creation & Services provides 360-degree EPCG lifecycle management.