The EPGC scheme is an export-oriented business scheme that enables the importer to import capital goods at zero rates of customs duty. The main aim of this scheme is to facilitate the import of capital goods for the production of quality goods and services in India. The scheme enables the authorization holder to import quality equipment and machinery at an affordable price to enhance the manufacturing competitiveness of the Indian manufacturers. The manufacturers can import capital goods at 0% customs duty that can be used in the pre-production, production or post-production process to produce quality products for the export market.
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The EPGC scheme is launched by the government of India under the foreign trade policy 2015-20. The scheme came into force on April 1st 2015. Under this scheme, manufacturers are eligible to import goods and equipment for the manufacture of export quality goods. The main benefit of the scheme is that the capital goods imported enjoy zero or concessional rates in customs duty. The lists of items that can be imported are specified under the scheme.
The EPGC scheme provides an avenue for the up-gradation of technology in the manufacturing sector. The Regional Licensing Authority of Director General of Foreign Trade is authorized with the task of issuing the EPGC authorizations based on the nexus certifications granted by an independent chartered engineer.
If the authorization holder has imported goods under the EPGC scheme then it is subjected to an export obligation. If the authorization holder is unable to comply with the specified export obligations, then the importer has to pay customs duty along with specified interest.
An entity must comply with the below-given export obligations to import capital goods at 0% customs duty under the EPCG scheme:
The export obligation will be relaxed under the following scenarios:
A Decreased export obligation for green technology products: the EPGC scheme states that the export obligation will be relaxed up to 75% in the case of green technology products.
Minimized export obligations for selective states: certain states like Jammu and Kashmir and Assam, Tripura, Nagaland, Manipur, Meghalaya, Sikkim, and Arunachal Pradesh will have export obligation reduce to 25%.
Rewards for early fulfillment: this is offered to an authorization holder who has complied with the export obligation by 75% or above. Such beneficiaries are eligible to receive relaxation on export obligations. This also applies to compliance of export obligation by 100% of the average to date, in half or below half of the specified export obligation.
The export promotion capital goods scheme levies certain restrictions on the types of capital goods that can be exported or imported. They are as follows:
Mentioned below is the list of documents the applicants must submit to obtain an EPCG license:
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