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EPCG Scheme 2025: Everything You Need to Know About Importing at Zero Cost

  • Writer: Shivam Tyagi
    Shivam Tyagi
  • Feb 20
  • 4 min read

The Export Promotion Capital Goods (EPCG) Scheme is a vital initiative by the Directorate General of Foreign Trade (DGFT), India, designed to facilitate the duty-free import of capital goods for businesses engaged in export production. By reducing upfront capital costs, the EPCG scheme enhances global competitiveness for Indian exporters.


This initiative is particularly beneficial for industries where access to modern infrastructure plays a crucial role in improving product quality, reducing operational costs, and expanding global reach.With India's push toward increasing its export footprint and making domestic industries more competitive, understanding how to leverage the EPCG scheme is critical.


Whether you are a new exporter or an established business looking to upgrade production, this guide will walk you through the entire EPCG process, benefits, eligibility criteria, application steps, and compliance requirements to ensure you make the most of this opportunity.


This guide explains how businesses can leverage the EPCG scheme to import capital goods at zero customs duty, ensuring compliance, fulfilling export obligations, and maximizing benefits.


Worker in hard hat points at stacked shipping containers under blue sky. Text reads: "EPCG Scheme 2025: Importing at Zero Cost."

 


What is the EPCG Scheme?


The Export Promotion Capital Goods (EPCG) Scheme allows Indian manufacturers and service providers to import capital goods at zero or concessional customs duty, provided they meet a specific export obligation.


✅ Who Can Apply?

  • Manufacturer exporters

  • Service providers in export-linked sectors

  • Exporters with supporting manufacturers


📌Regulating Authority: DGFT (Directorate General of Foreign Trade)

📌Export Obligation: 6x duty saved within 6 years

📌Industries Benefiting: Textiles, Pharmaceuticals, IT, Automotive, Food Processing, and more



 

EPCG Scheme Benefits


The EPCG scheme provides numerous advantages to exporters looking to modernize their manufacturing processes while minimizing capital investment costs. By eliminating or reducing customs duties on imported capital goods, businesses can enhance efficiency, reduce production costs, and compete effectively in the global market.


Below are some of the key benefits exporters can leverage through this scheme.


✔ Zero or Concessional Duty on Capital Goods – Reduces capital expenditure, making it easier for businesses to invest in new machinery and technology.

✔ Encourages Technology Upgrades – Access advanced machinery to improve production efficiency, quality, and global competitiveness.

✔ Boosts Export Performance – Indian exporters enhance cost efficiency and meet international quality standards by using state-of-the-art equipment.

✔ Long-Term Profitability – Higher margins by reducing operational costs, allowing businesses to reinvest savings into research, development, and expansion.



 


📌 Eligibility Criteria for EPCG License

To take advantage of the EPCG scheme, businesses must meet certain eligibility criteria. The scheme is designed to benefit exporters who need capital goods to improve production and meet international standards. Below are the key eligibility requirements:


🔹 Minimum Requirement: Must be an IEC (Import Export Code) holder

🔹 Capital Goods Covered: Machinery, tools, equipment, software used for export production

🔹 Export Obligation (EO):

  • Average EO: Maintain past export performance to ensure continued eligibility.

  • Specific EO: Export 6 times the duty saved within 6 years to comply with the DGFT regulations.



 


Step-by-Step Guide to Apply for EPCG License via DGFT


To make the most of the EPCG scheme, businesses must follow a structured application process through the DGFT portal. Below is a detailed breakdown of how to successfully apply for an EPCG license.


1️⃣ Register on DGFT Portal


2️⃣ Fill Out EPCG Application (ANF 5A)

  • Provide business details, capital goods information, and export obligation details

  • Ensure HS Code matches DGFT classification


3️⃣ Upload Required Documents

📌 Mandatory Documents:

✔ Import Export Code (IEC)

✔ GST Registration

✔ Proforma Invoice of Capital Goods

✔ CA Certificate for Financial Strength

✔ Past Export Performance Reports (if applicable)


4️⃣ Pay the Application Fee

  • Fee varies based on CIF value of imported capital goods


5️⃣ Submit & Track Status

  • Receive an EPCG Application Reference Number (ARN)

  • Track approval status via DGFT Portal


📌 Processing Time: 5-7 working days

Flowchart titled "EPCG Process Flow" shows steps 1-5: apply, submit documents, receive approval, import goods, and submit reports. Brown circles.

For more detail step-by-step guide, click here.

 

Compliance: Meeting Export Obligations

Once an EPCG license is issued, the exporter must fulfill an export obligation (EO):

✅ Export obligation = 6x duty saved within 6 years

✅ Fulfillment Methods:

  • Direct Export

  • Supply to SEZs (Special Economic Zones)

✅ Reporting: Quarterly updates via DGFT Portal


What Happens if You Fail to Meet EO?

❌ Repayment of Duty Saved + Interest

❌ Possible Blacklisting by DGFT



"How to Avoid EPCG Non-Compliance Penalties" header. Checklist with "Do": plan exports, report quarterly, maintain compliance. "Don'ts": failure risks.


 

🛑 Common Challenges & Solutions in EPCG

🚧 Challenge 1: Delayed License Approval

✔ Solution: Ensure complete documentation & follow up with DGFT.


🚧 Challenge 2: High Export Obligation Requirement

✔ Solution: Plan incremental exports instead of last-minute bulk shipments.


🚧 Challenge 3: EPCG Compliance Complexity

✔ Solution: Hire an EPCG consultant for proper documentation.


Source: Indian Chamber of Commerce Report, 2024



 

Conclusion


The EPCG scheme is an invaluable tool for Indian exporters looking to enhance their global competitiveness by reducing the burden of high capital costs. By allowing businesses to import capital goods at zero or concessional duty, it encourages investment in advanced machinery, technology upgrades, and improved production efficiency.


For companies aiming to expand their footprint in international markets, the EPCG scheme serves as a powerful enabler by ensuring that exporters can reinvest their savings into innovation and global outreach. However, it is crucial to remain compliant with export obligations, as failure to do so can lead to financial penalties and restrictions.


By leveraging the EPCG scheme effectively, exporters can strengthen their operations, increase revenue potential, and contribute to India's growing presence in the global trade arena.


🚀 Final Call-to-Action: Ready to apply? Visit DGFT.gov.in to start your EPCG application today!




 



FAQs – Everything You Need to Know About EPC


What types of capital goods can be imported under EPCG?

Machinery, equipment, spare parts, and software for export production. (For more information: Read DGFT Circular, 2024)

What happens if I fail to fulfill the export obligation?

How long does it take to process an EPCG application?

Can MSMEs apply for EPCG?

Is there a limit on the number of EPCG applications?

Do I need to renew my EPCG license?

Can I transfer capital goods imported under EPCG?



 







 
 
 

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