Understanding How to Procure Duty Free Capital Goods under the EPCG Scheme

[@directorategeneralofforeig3800]

THE ENTIRE TRANSCRIPT FOR THE VIDEO IS AVAILABLE BELOW : If you want to export, you may have to invest in capital goods to make export products. You may find that captial goods procurement is costly. And then you see that you have to pay customs duties if you import your capital good machine, or excise duties if you buy it in India. You wish there was a scheme to ease your burden. Atleast, a scheme that makes these duties and taxes zero! FTP indeed has such a scheme for exporters! It is called EPCG scheme - Export Promotion Capital Goods Scheme. The objective of the EPCG scheme is to help in import or domestic procurement of capital goods like machinery etc. for producing quality goods and services for exports. The idea here is to enhance India’s export competitiveness. The scheme allows for duty free import of Capital goods or exception from duties in case the capital good is procured from a domestic supplier. What goods are eligible? Capital goods by definition are any plant, machinery, equipment or accessories required in manufacture or production or for rendering services. Besides capital goods, computer software systems, spares, moulds, dies etc. or catalysts are also allowed. You may refer to paragraph 5.01 of the foreign trade policy for exact details. All of these items can be imported or indigenously procured without payment of duties under the EPCG scheme given that they will be used for producing export goods and services. What are the obligations once the Capital good is procured? Once a good has been imported the authorization holder of the EPCG licence would have to make exports and show proof of the same to DGFT for redemption of the authorization. The exports in the next 6 years should be at least 6 times the duty saved in the authorization. This export should be over and above the average exports done by the firm in the last 3 years. This export obligation is again divided into 2 blocks of 4 year and 2 years. At least 50% of the exports must be done in the 1st block of 4 years and the remaining in the last 2 years. For example, assume a firm is having an average export of 1 Crore in last 3 years. Now in April 2016, it buys some machinery for 30 lakhs and saves duty of around 10 lakhs under the EPCG scheme. The company must continue to make average exports of 1 Crore for the next 6 years i.e. till 2022. Further it has to make extra exports of 10 lakhs * 6 = 60 lakhs in the next 6 years. However, if the machine is not imported but brought from a domestic supplier the export obligation is reduced by 25%. So now the export obligation is 45 lakhs instead. This reduced export obligation is there to encourage the manufacture of good quality capital goods within India so that we do have to import them. There are certain other relaxations given for green technology products, units located in the North East region, Jammu and Kashmir etc. How does one apply? 1. To apply for an EPCG authorization one has to make an online application with one’s digital signature on the DGFT website under application form ANF-5A. The details of the capital goods and the list of export items or service it will be used for should be provided. 2. An independent charter engineer’s certificate must be furnished as per format given in Appendix- 5A to show the nexus for the given capital goods. Basically, the engineer certifies that the machinery is required for making the given export items or services. 3. A Chartered Accountant/ Cost Accountant/Company Secretary should provide a certificate as per the format given in Appendix-5B stating the financial declaration of the firm and the exports done in the last 3 financial years. 4. Once the application is approved an EPCG authorization is issued by DGFT which must be registered at the port of registration as stated. The Customs may impose a bank guarantee on the applicant if it perceives that there might be some risk in fulfilling the Export Obligation. 5. After the capital good is procured it should be installed and a certificate of installation confirming the installation at the factory / premises mentioned must be furnished within 6 months. 6. As explained earlier, after installation the export obligation must be met. The proof of the exports should be furnished with the DGFT office for redemption of the authorization. For more specific details regarding the EPCG scheme please read through Chapter 5 of the foreign trade policy and the handbook of procedures which are available on the DGFT website. For further help, speak to the Niryat Bandhu officer at the DGFT office closest to you.

[@eknumberindia393]

Excellent insights. Waiting for more videos. Grateful!🙏

[@uttamchand72]

very good information for new startup. thanks DGFT

[@MrSpiritofdaring]

Very educative and excellent initiative.

[@rebelssurya]

Super subject

[@hemantmaharshi5843]

Could you please share the us the video for Advance Licence as well.. and also for online application fillings video under different export incentive schemes

[@vijayg0811]

their is 1 typing mistake time 4.40/7.32 mistek:- so that we do have to import them correct:- so that we do not have to import them

[@kaushalmehta8383]

Please give us value addition on what is appendix 4e,4h what are the documents to be checked by a ca for that

[@logicalindian7526]

very good.....keep it up.

[@CheTanKwaTra]

Please provide updated EPCG procedure after implementation of GST

[@shivamchaubey5014]

amazing vdo, very helpful - thanks a lot

[@sectionofficer96]

Nice video sir

[@logicalindian7526]

by the way who's voice is there ?

[@sudhirpwc]

can we get slides

[@pulkitgoel]

nice job sirji

[@SUSHILKUMAR-ej1ff]

very good

[@srinivaskalvala]

it's very important for us being as a Exim segments.

[@narasimmanr5659]

Sir upload Tamil audio

[@yadavg1488]

Kripya hindi apnao yr...saala hindi bolne mein kya takleef hai??