EPCG scheme under new Foreign Trade Policy 2015-20 (FTP 2015-20)

 The information provided here is part of Import Export Training online

Click here to read about EPCG scheme under Foreign Trade Policy 2015-20

Update: 01st  April 2015 – Click here to read Foreign Trade Policy of India 2015-20 (FTP 2015-20)  Foreign Trade Policy 2015-20.pdf

Learn International trade free

How to get export orders?

Only three mandatory documents required for exports and imports

Merge your commercial invoice and packing list for all your future exports

How to cover credit risks in export business?

Bank pre shipment loan to exporters in India

Packing credit finance to exporters

EPCG Authorization holders await to hear Foreign Trade Policy 2015-20?

Export Promotion Capital Goods EPCGTraders are eagerly awaiting to know new amendments and modification on export promotion scheme, Export Promotion Capital Goods EPCG in new Foreign Trade Policy 2015-20 , is being  operationalized  on 1st April, 2015.

 

Under EPCG scheme of Foreign Trade Policy, import of capital goods which are required for the manufacture of resultant export product specified in the EPCG Authorization is permitted at nil/concessional rate of Customs duty. The Export Promotion Capital Goods scheme under FTP enables up gradation of technology of the indigenous industry. EPCG Authorizations are issued by Regional Licensing Authority of Director General of Foreign Trade on the basis of nexus certificate issued by an independent chartered engineer.

As per the Foreign Trade Policy 2009-14 amended later time to time in annual supplements, the EPCG Authorization holder is permitted to import capital goods at 0% or 3% Customs duty. Under the 0% duty EPCG Authorization holder is required to undertake export obligation equivalent to 6 times of the duty saved amount on the capital goods imported within a period of 6 years reckoned from the date of issue of Authorization. Under the 3% duty EPCG scheme, the Authorization holder has to fulfill EO equivalent to 8 times of the duty saved amount on the capital goods imported in 8 years.

Under EPCG scheme, the capital goods imported are subject to actual user condition and the goods imported cannot be transferred or sold till the fulfillment of export obligation. In order to ensure that the capital goods imported under EPCG scheme are utilized in the manufacture of resultant export product, after importation and clearance of capital goods from Customs area at importing location, the Authorization holder is required to produce certificate from the jurisdictional Central Excise Authority or Chartered Engineer confirming installation of such capital goods in the declared premises. At present, a period of 6 months is allowed for the purpose of installation of capital goods and commencement of production. This period may be extended by the Assistant/Deputy Commissioner of Customs.

 At present, before operationalization of new Foreign Trade Policy 2014-19, the EPCG Authorizations are issued to manufacturer exporters and merchant exporter with or without supporting manufacturer, and service providers. EPCG scheme is also available to a service provider who is designated or certified as a Common Service Provider by the DGFT or State Industrial Infrastructural Corporation in a Town of Export Excellence. EPCG authorization issued to a Common Service Provider gives details of the users and the quantum of export obligation which each user has to fulfill. The CSP as well as the specific users are under an obligation to fulfill the export obligation under EPCG scheme.

At present, up to 50% of the EO may also be fulfilled by export of other goods manufactured or service provided by the importer or his group company or managed hotel, which has the EPCG Authorization, subject to the condition that in such cases, additional EO imposed shall be over and above the average exports achieved by the importer or his group company or managed hotel in preceding three years for both the original and the substitute products or services .

The EPCG Authorization specifies the value,quantity or both of resultant export product to be exported against it. In the case of manufacturer,merchant or service exporters, such export obligation is required to be fulfilled by exporting goods manufactured or capable of being manufactured or services rendered by the use of capital goods imported under the scheme.

EPCG under FTP 2014-19

After the introduction of Export Promotion Capital Goods scheme by Foreign Trade Policy and subsequent amendments and supplements ordered in different circulars till 18th January, 2011, the EPCG Authorization holder is required to file a bond with or without bank guarantee with the Customs prior to commencement of import of capital goods. Bank guarantee equal to 100% of the differential duty in case of merchant exporters and 25% in case of manufacturer exporters is required to be submitted except in case of a few exempted categories to ensure fulfillment of specified export obligation as well as to secure interest of revenue.

Now, EPCG Authorization can also be obtained for annual requirement with a specific duty saved amount and corresponding export obligation. It indicates the export products through which export obligation shall be fulfilled.

As per present Foreign Trade Policy 2009-14 supplemented by different notifications time to time, the normal validity period of zero duty EPCG Authorization is 9 months and that of 3% EPCG Authorization is 24 months. The licensing Authority may revalidate authorization for six months at a time and maximum up to 12 months from the date of expiry of validity. For the purpose of monitoring export obligation, the EPCG Authorization holder is required to indicate the details of EPCG Authorization on the Shipping Bill and Commercial invoice,in case of deemed exports. After fulfillment of specified export obligation, the Authorization holder submits relevant export documents along with EPCG Authorization to the DGFT authorities for the purpose of obtaining EO discharge certificate. After obtaining export obligation discharge certificate from DGFT, the Authorization holder produces the same before Customs for the purpose of obtaining redemption of bond and Bank Guarantee filed by EPCG Authorization holder.

For the purpose of monitoring and ensuring on export obligation fulfillment by EPCG Authorization holder, block wise export obligation is also specified by licensing authority based on the guidelines of Foreign Trade Policy amended time to time.

Present Foreign Trade Policy allows EPCG authorization holder to extend block-wise period for any block or overall period of fulfillment of export obligation up to a period of two years on payment of composition fee equal to 2% of proportionate duty saved amount on unfulfilled export obligation for each year of extension. The Licensing authority grant further extension in the overall period of EO up to a period of further two years if the authorization holder pays 50% of differential duty on the unfulfilled portion of export obligation and agrees to fulfill other conditions as may be specified by the Regional Authority (Licensing Authority) for this purpose.

At present, the EPCG holder under zero duty scheme can avail only one extension of two years in export obligation period shall be available subject to conditions mentioned.

As per the present Foreign Trade Policy, under an EPCG scheme, exports in discharge of export obligation are entitled to duty neutralization schemes like Drawback, Advance Authorization, DFIA etc. as well as benefits of reward schemes such as FPS, FMS, VKGUY etc. in accordance with the terms and conditions of those schemes. But as per Foreign Trade Policy amended time to time with annual supplements, benefits under reward schemes like TUFS and SHIS can not be in the year in which the zero duty authorization has been issued.

EPCG scheme is one of the best export promotion schemes introduced by government under Foreign Trade Policy where in import of capital goods can be effected at nil or concessional import customs duties based on the conditions specified in the customs notifications and export obligations. However, EPCG authorization holder has to fulfill export obligation against the scheme specified, action is taken by the authorities to recover the import customs duty on defaulters through an institutional mechanism.

Click here to read about EPCG scheme under Foreign Trade Policy 2015-20

Would you expect any changes in the present mechanism under export promotional scheme EPCG in new Foreign Trade Policy 2015-20 ? Share below your experience as an EPCG Authorization Holder under FTP 2015-20 .

The above information is a part of Export Import Training online

What is EPCG How EPCG works in Export Import trade?

Difference between EPCG and ECGC

EPCG scheme under new Foreign Trade Policy 2015-20 (FTP 2015-20)

EPCG under Foreign Trade Policy 2015-20

Guidelines to execute Bank Guarantee, Legal under Taking for EPCG and Advance Authorization

Action on default in export obligation under the Advance or EPCG authorizations

FTP 2015-20, Changes in Schemes of reward or incentive, advance authorization or DFIA, EPCG or post export EPCG

Comment below your thoughts about this article - Any amendments in EPCG scheme under new Foreign Trade Policy 2015-20 (FTP 2015-20 )?


 

Posts about export import online training

Risks and solutions in Import Export business

How does Letter of Credit work?

How to protect buyer and seller in triangular exports?

How to export goods from India?

High sea sales procedures and formalities

Types of export containers and dimensions

 

When does exporter get EP copy of shipping bill after customs clearance

Indian customs duty, excise duty and service tax changes as per Budget 2015-16

What is crystallization of export bills? How does delinking of export bills work?
Liquidation of Bank pre shipment finance to exporters
Running account facilities for bank export finance
Pre shipment bank finance to suppliers for exports through other agencies
Conditions to get export loans from banks to sub suppliers
Are construction projects eligible for Bank pre shipment loan?
Bank Packing credit to exporters of Floriculture, Grapes and Other Agro-based Products
What is Bank post shipment credit to exporters?
Period of post shipment credit by bank to exporters
Bank finance to exporters as pre shipment finance

Click here to go back to INDIAN BUDGET 2014-2014 highlights
Excise and Customs - Click here to read complete notification under Budget 2014
Service Tax - Click here to read complete notification under Budget 2014
Click here to know a basic tutorial about HS code (HST code)     
 
How to find foreign  buyer? Some tips to get overseas buyers
Click here to know HS code of other product/commodity
Is THC same in all ports
What is FOB price in Exports and Imports and how it works
What is the difference between BAF and CAF
Who receives the amount of auctioned / resold imported unclaimed/un-cleared goods?
What is VACIS exam in US import customs clearance 

Types of export containers
Measurement of export containers
Export Import Policy of India 2015-20
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation


Comments


rajesh Sarangi: hello! is there any scheme where the Machines dealer who are importing the machines & keeping stock in India can get the facility for Duty rebate/discount?

Sanjay Singh: With the integration through edi between dgft and customs can an importer expects 1) simplification in redemption formalities an bond release for which they have to rush between two ministries? 2) can there be some facility being introduced for online and ontime monitoring, facilitating importer to focus on core task of the business to fulfil Export Obligation imposed, instead of maintaining records to submit for closure of licenses / authorisation issued? Monthly alerts on the EO fulfilled status to be circulated on the registered id. 3) provision of Self declaration on installation may be pondered over.

Baldev Kalra: Scrap Zero Duty EPCG Scheme and Duty Exemption Scheme, Duty Drawback & FPS/FMS Scheme as they are against WTO norms. Exporters do not need export incentives

giriraj gupta: whether a EPCG can bee issued for the exports made in past and whether such past exports are countable towards EPCG export obligation.

Manish: Do we require to submit Block-wise report if EODC applications, along-with required documents and certificate, is submitted to DGFT as well as to concerned Customs authority within the period of Block report? If so, pl. let me know the relevant para/circular/notification etc.

S. RAMESH: dear sir kindly provide details for EPCG & Procedure and document regards s.ramesh

rameshwar lal prajapat: I am chartered engineer from institution of engineers india.F-1183925,B.E.(HONS)CIVIL,F.I.E.,F.I.V.May I issue certificate for NEXUS under EPCG scheme and for fixation of SION.KINDLY CONVEY SUGGESTION.

Shrikant: What is the difference between EPCG Scheme and Post Export EPCG Scheme? Now we are importing Capital Goods under 0% EPCG Scheme and i want to know about the Post Export EPCG Scheme.

venkatesham: let me know closure of EPCG time period.

Haresh Thule : I am Haresh P. Thule from Surat in gujarat and recently (since last 1 year) start working in Import export industry as a consult. At present i am providing services like IEC and EPCG issuance. I am regular reader of your site and find that you have very good (excellent) knowledge in this industry ans some of the very useful information which we can practically use. So, Sir, I like to request you can you train me or can i hire your consultancy services. So, please sire please give me your nice reply and your support.

Bal Bahadur : I want all export incentive license Books in india & How to Work on this Like.1. EPCG ADVANCE LICENSE BOOKS 2. EPCG 3. DFIA 4. FOCUS MARKET SCHEM 5. FOCUS PRODUCT SCHEM 6. EOU/EHTP/STP & BTP SCHEMES 7. Market Access Initiative (MAI) Scheme 8. Post Export EPCG Duty Credit Scrip Scheme 9. DUTY EXEMPTION & REMISSION SCHEMES.

Bhushan Gupta : I have gone through your article on EPCG scheme which is very much purposeful. I need your opinion on the following issue One manufacturing company producing two products A AND B. One product "A"(say sport shoes) having different manufacturing process is manufactured exclusively in one factory. Second product"B"(say Hawai chappal) having different manufacturing process is manufactured exclusively in second factory. but Both the products fall in same category i.e. Footwear. Product A is being exported but product is not exported. However, company wish to import machinery for the manufacture of product B. Kindly advise me whether company can import machinery for the manufacture of production of product B under EPCG scheme 2015-2020 (without payment of custom duty but fulfilling export obligation through the export of product A).

manisha salvi : I read your articles on website. It was very informative for fresher. I am having a custom clearance/freight forwarding consultancy in Mumbai.I am independently doing it from my residence. I have got some exporters who have given me their PUNE DGFT work of EPCG redemption, obtaining New EPCG license & TED refund. Surendranji I don't have knowledge of this field. I have to run my house as a single mother bcoz recently I lost my husband. So i had to accept this work as clearance work comes once in a month or two. The Pune Dgft officer are not so good to explain the documents list,Procedure and small things like self address envelopes with postal stamps ....They just accept the files and issue DL against the files.i don't want to fall down my impression on my clients.I have downloaded the 2015-2020 policy and handbook from the Dgft site. Can you please help me in the same thing like what exact documents, ANFs....

vinab: can imported capital goods under epcg scheme clear for export after obtaining eodc ,if yes what are the conditions / restriction on such transaction.

Saravanan: Dear Sir, I'm not familiar with Epcg and this is first time I'm going to import a printing machine from Poland... I'm a job worker not an exporter, now how can I get duty free import using Epcg licence with 3rd party export... If I'm correct the central government have announced dated sep24 2016 that the job worker can also get duty benefits with the help of Epcg... Pls guide me how to proceed... I'm from Tirupur...

manan: Dear sir, please clear to EPCG UNDER DEEP EXPORT VALID & PAYMENT BY INDIA COURIERS SO PLEASE REFER TO OUR EPCG OBLIGATION FULL FILL BY INDIA COURIERS PAYMENT RECEIVED

Christopher Paul Raj: My self Christopher from EXIM dept. Thanks for sharing your contact id & support to indiviual in connection EXIM matters. I would like to know about EPCG EO condition. We are exporter under chapter 84, planning to import a machine under EPCG scheme. To produce a DIESEL Engine we are using 30 imported component & among these components one particular component i.e CYLINDER HEAD will be machined in imported machine under EPCG scheme. Our doubt is that for EPCG EO fufilment we need to calculate assessable value of CYLINDER HEAD (Rs.1500/-) which is machined or FOB value of export diesel engine (Rs.90000/-). Kindly educate on same & do the needful.

Discussion Forum

You can also share your thoughts about this article.
Any one can answer on question posted by Readers