EPCG -Export Promotion Capital Goods Scheme, is an advantageous scheme for procurement of Capital Goods, by businesses who plan to export in future. It saves substantial amounts of import duty, subject to Export Obligations. Duty thus saved can be used to factor in the costing of export products.
- The scheme allows import of New capital goods (including CKD/SKD thereof and spares, jigs, fixtures, dies and moulds) at NIL Customs duty as against the normal total of 27.1%, thus providing a total duty saved of import value. This is subject to an Export Obligation (EO) equivalent to 6 times of duty saved, to be fulfilled over a period of 6 years reckoned from the date of issuance of license. For large projects, units in North East, SSI etc. there are more relaxed norms of EO.
- The scheme covers manufacturer exporters with or without supporting manufacturer(s) / vendor(s), merchant exporters tied to supporting manufacturer(s) and Service Providers.
- Actual user conditions: Import of capital goods are subject to Actual User condition till the export obligation is completed.
- Export obligation: The export obligation needs to be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme. Deemed Exports like supplies to Mega Power Projects, Projects funded by IBRD/IDA/ADB etc, EOUs etc. can also be utilized to fulfill the EO
- Indigenous Sourcing: A person holding an EPCG license may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG license holders shall be eligible for refund of GST paid by him. In addition the indigenous supplier can import his own raw material duty free and other benefits which can be discussed
Role of Andees Team
It is very important to note in the above process, that foresight and experience can play a big role in not only getting an optimum license issued, but also in monitoring the export obligation and documentation at each point. Further in case of delay in exports, timely actions can save a lot of problems and liability in future. Finally a proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, taking into account other EPCG, and also other schemes, compliances etc.
Andees has been assisting clients for the whole process of EPCG for the last more than 20 years. Sound knowledge of Policy & Procedures along with a very qualified and experienced team, Andees has handled hundreds of complicated matters related to EPCG, saving thousands of crores for clients that are MNCs, Indian Corporates, or PSUs. While proper planning during the entire life cycle has helped smooth operations, several complicated matters even at the last stage have been saved by Andees team from substantial liabilities.