Economics Special: Export Promotion Capital Goods (EPCG) Scheme.

India had two variants of EPCG Scheme:

1.       Zero Duty EPCG for few sectors and

2.       3% Duty EPCG for all sectors.

In 2012, a new Post Export EPCG Scheme was also announced.

In 2013, the government has merged Zero Duty EPCG and 3% EPCG Scheme into one scheme which is now known as Zero Duty EPCG Scheme covering all sectors.

EPCG is a zero duty scheme which allows the import of capital goods such as machinery for preproduction, production and post production of export items.

But the duty free import by an exporter has to be paid back in the form of an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. This means that if an exporter imports a tool making machine and saves an import duty of Rs. 100, he will have make the tools and export tools worth minimum Rs. 600 within 6 years.