FOREIGN TRADE POLICY ANALYSIS:

Chapter 5 Export Promotion Capital Goods Scheme: Policy

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.
1

FTP

5.00 Objective

Earlier EPCG scheme has not defined its objective. The objective has
been introduced to bring emphasis on Export Competitiveness and
Quality of the goods.

FTP

5.01 EPCG
Scheme

FTP

The objective of the EPCG Scheme is

to facilitate import of capital goods
for producing quality goods and
services to enhance Indias export
competitiveness
In case of Spare imports under EPCG
scheme, there will not be concession
on the export obligation as provided
in earlier FTP.
Spare from Indigenous Sources can
be purchased under EPCG Scheme.

FTP

FTP

FTP

5.1 (g) EPCG

Scheme

Export Obligation in case of import of spares was restricted to 50% of

EO defined in the policy. Now such restriction has been withdrawn
therefore 100% EO as specified in the policy will be applicable for
import of spares also.
Under the earlier provision of FTP (para 5.2A b), the spare cannot be
procured under EPCG from domestic suppliers. This restriction has
been removed in line with promotion of Make in India concept.
EPCG for Annual Requirement has EPCG for Annual Requirement has been dispensed accordingly HBOP
been dispensed.
has also been amended.
EPCG for retail sector has been Retail sector will not be entitled for EPCG scheme henceforward.
removed.
Authorisation under EPCG Scheme Restriction has been put on following exporter of energy for obtaining
shall not be issued for import of any EPCG Scheme,
Capital Goods (including Captive
plants and Power Generator Sets of (i) Export of electrical energy (power)
(ii) Supply of electrical energy (power) under deemed exports
1

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.
any kind) for,

(iii) Use of power (energy) in their own unit, and

(iv) Supply/export of electricity transmission services

(i)

Export of electrical energy

(power)
(ii) Supply of electrical energy
(power) under deemed exports
(iii) Use of power (energy) in their
own unit, and
(iv) Supply/export of electricity
transmission services
7

FTP

5.01 (i) EPCG

Scheme

FTP

5.02 Coverage

If the goods proposed to be exported

under EPCG authorisation are
restricted for export, the EPCG
authorisation shall be issued only
after approval for issuance of export
authorisation from Exim Facilitation
Committee at DGFT Headquarters
Name of supporting manufacturer(s)
shall be endorsed on the EPCG
authorisation before installation of
the capital goods in the factory /
premises
of
the
supporting
manufacturer (s). In case of any
change in supporting manufacturer
(s) the RA shall intimate such change

In case restricted goods for exports, the EPCG can be granted after
issuance of export authorisation by Exim Facilitation Committee at
DGFT, New Delhi.

The supporting manufacturer name will be required to be endorsed on

EPCG Authorisation. The provision for change in the supporting
manufacturer has been incorporated in the FTP. In case of change in
supporting manufacturers RA will intimate to jurisdictional central
excise and customs authorities.

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.

FTP

10

FTP

11

FTP

12

FTP

13

FTP

5.04 (c) Export

Obligation

to jurisdictional Central Excise

Authority of existing as well as
changed supporting manufacturer (s)
and the Customs at port of
registration of Authorisation
In case Premier Trading Houses
(PTH), the average exports can be
computed as athematic mean of last
5 years exports at the option of
exporter.
In case of indigenous sourcing of
Capital Goods, specific EO shall be
25% less than the EO stipulated in
Para 5.01.

This provision has been removed. In other words for all exporters, the
Average Export will be arithmetic mean of last 3 years exports.

The export obligation in case of domestic sourcing of capital goods has

been reduced from 90% to 75%. In other words export obligation will
be 4.5% of duty saved (customs duty) to be fulfilled in six years. This
benefit has been extended in line with promotion of Make in India
concept
5.05 Provision In case BIFR Units, the export In case BIFR Units, the export obligation can be extended for a period
for units under obligation can be extended for a upto 3 years. Earlier it was up to 9 years.
BIFR
period for a period of 3 years.
/Rehabilitation
Technological
Up-gradation
of Technological Up-gradation of existing EPCG Machinery under EPCG
existing EPCG Machinery under EPCG Scheme has been removed.
Scheme has been removed.
Utilisation of Post Export EPCG Earlier the Post Export EPCG was allowed to be utilised for the purpose
Scheme has been made in line with of Central Excise and Custom Duties. Now in addition to this, the same
utilisation procedure of scrip issued can also be utilised for service tax payments.
under Chapter 3 of FTP.
3

Chapter 5 Export Promotion Capital Goods Scheme: Procedure

Sr.
No.
1

FTP /
HBOP

Para

New Provision

Comments / Impact

HBOP

5.04
Certificate of
Installation of
Capital Goods

Installation certification in case of

EPCG can be obtained from
Independent Chartered Engineer or
Central Excise Authority.

This is one of the major relaxation to the exporters obtaining EPCG

Authorisation. Earlier Installation Certificate from the Central Excise
authorities was required. In case the certificate has been obtained from
Chartered Engineer then in such cases, the Authorisation holder will be
required to intimate regarding installation of EPCG to the Jurisdictional
Central Excise Authorities.

HBOP

5.04
Certificate of
Installation of
Capital Goods

RA has authority to extend period of

submission
of
installation
certification for further period of 12
month.

HBOP

5.06 (b)
Import of
spares, tools,
refractories
and catalysts

No list of spares will be required for

import of Spare under EPCG.

HBOP

HBOP

5.07 (c)

This the welcome step which will reduce unnecessary time of delay and
corruption.
This is welcome provision. The RA has power to extend period of
submission of Installation certificate by 12 month. In other words, the
exporter can submit the installation certificate within period of 18
month from the date of import if permission from RA to this effect has
been obtained.
The requirement of listing the spares to be imported under EPCG at the
time of obtaining Authorisation has been dispensed with. In other
words, the exporter can import the goods under general description
spares

Condition for sourcing of indigenous

capital goods has been removed.
Exit under EPCG Scheme from EOU /
relocated SEZ Unit:

The exporter cannot obtain EPCG Authorisation on lease basis in case of

indigenous capital goods.
Clarity has been brought in case of exit under EPCG scheme from EOU /
relocated SEZ,

Conversion of
4

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.

EOU/
Relocated SEZ
Units to DTA
Unit under
EPCG Scheme

a) The export obligation and its period will be same as normal

authorisation holder. The export obligation will be 6 time of duty
saved on the depreciated value of the capital goods.
b) In case the conversion unit is the only unit then average export
obligation will be zero.
c) In case the company has units other than EOU / SEZ Unit, then
the exports made by EOU / SEZ will be excluded for the purpose
of computation of average export obligation. In other words,
export of other units (except for specific EO) will be considered
for computation of average export obligation.

5.08 (d)
Sourcing of
Capital Goods
Manufactured
Indigenously
HBOP
5.10
Conditions for
fulfilment of
Export
Obligation

RA concerned will issue the Earlier there was provision of issuance of Invalidation in duplicate. Now
invalidation letter / ARO, in it will be issued in quadruplicate.
quadruplicate.

HBOP

Documents required for EPCG Following requirement has been given in case of export from third
Redemption in case of third party party,
exports.
a) export documents viz., shipping bills / Bill of exports etc. shall
indicate name of both authorization holder and supporting
manufacturer, if any, along with EPCG authorization number.
b) BRC, GR declaration, export order and invoice should be in the
name of third party exporter.
c) A copy of agreement entered into between the authorization
holder and the ultimate exporter
5

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.
d) ARE-1 Certificate issued by Central Excise with the shipping bill
number, date and EPCG authorization number
e) Invoice duly incorporating the relevant EPCG authorization
number & date at the time of dispatch
f) Lorry Receipt (LR) /Logistical evidence for transportation of
goods from the premises of the authorization holder to the third
party/port of export
g) An undertaking from the 3rd party on a stamp paper, declaring
that the products exported for fulfilment of EO by them on
behalf of the license holder as per details given in the statement
of exports, were manufactured by the license holder
h) Financial evidence for having received proceeds through normal
banking channel from third party exporters account to the
authorization holders account towards such third party supplies.
i) Disclaimer certificate from third party that they shall not use
such proceeds towards EO fulfilment of any EPCG authorization
(s) obtained by them
8

HBOP

HBOP

5.11
Realization of
Export
proceeds
5.15
Monitoring of
Export
Obligation

Realisation in case Supplies to SEZ Earlier there was no specific provision for realisation from Foreign
Unit shall be from Foreign Currency Currency Account in case of supplies from SEZ Units. Now specific
Account of the SEZ Unit.
provision has been inserted.
Return for status of fulfilment of Return for stratus of fulfilment of Export obligation is required to be
Export obligation is required to be filed online by 30th April every year with Digital signature.
filed online.
6

Sr.

FTP /
HBOP

Para

No.
10

HBOP

11

HBOP

5.17 (c)
Extension in
Export
Obligation
Period
5.22 (b)
Redemption

12

HBOP

13

14

New Provision

Comments / Impact

Time limit for application of Welcome Provision.

extension of Export Obligation period
has bene extended from existing 30
days to 75 days.
A statement giving details of the RA concerned is required to issue a certificate of discharge of export
documents submitted by the obligation and now also need to enclose a statement giving details of
authorisation
holder
towards documents.
evidence of EO fulfilment shall also
be enclosed with the certificate.

5.22 (b)
Redemption

Applications that remain outstanding

beyond a period of 60 days after
receipt of complete documents shall
be reported to the EPCG Division at
DGFT headquarters along with
reasons thereof.
HBOP
5.23(b)
Authorisation holder can also pay
Regularization duty and interest suo-motu on the
of Bonafide
basis of self /own calculation as per
Default and the procedure specified in paragraph
Exit from
4.50 of HBP
EPCG Scheme
HBOP
5.24
Every EPCG authorisation holder
Maintenance shall maintain, for a period of 2 years
of Records
from date of redemption, a true and

Earlier said report pertaining to outstanding application beyond the

period of 90 days was required to be submitted, now it has been
reduced to monitor speedy disposal.

In case of default in fulfilment of export obligation, authorisation holder

can pay the duty and interest on their own.

Earlier period of maintenance of record /accounts after redemption was

3 years which is not made 2years.
7

Sr.

FTP /
HBOP

Para

New Provision

Comments / Impact

No.

15

HBOP

5.27(c)
Clubbing of
EPCG
authorisations

proper account of exports/ supplies

made and services rendered towards
fulfilment of export obligation
Provision of Paragraph 5.21 shall not Provision of paragraph 5.21 i.e. condonation of shortfall in export
be applicable in case of such clubbed obligation will not be applicable to clubbed authorisations
authorisations