Written by: Paras Nagpal, Business Consultant, GetMyCA
Reviewed by: GetMyCA Export & Compliance Advisory Team
Last Reviewed: 3 September 2026
Quick Answer
If your business plans to import or domestically procure eligible capital goods for export production, the EPCG Scheme can reduce the upfront customs-duty burden. In return, the authorisation holder must meet export-obligation conditions under Foreign Trade Policy 2023 and the Handbook of Procedures.
Under FTP 2023, the standard Specific Export Obligation is generally six times the duties, taxes and cess saved on the capital goods, to be fulfilled in six years. An EPCG Authorisation is valid for import for 24 months from the date of issue, and revalidation is not permitted. The six-year Specific EO period is divided into a 4+2 block structure under HBP 2023 Para 5.13.
Key Takeaways
- EPCG is governed by Foreign Trade Policy 2023, Chapter 5 and administered by the Directorate General of Foreign Trade (DGFT).
- Standard Specific Export Obligation is generally 6 times the duties, taxes and cess saved, to be fulfilled within 6 years from authorisation.
- The authorisation is valid for import for 24 months from issue; revalidation is not permitted under FTP 2023 Para 5.01(d).
- Specific EO is fulfilled block-wise: 50% in Years 1-4 and the balance in Years 5-6 under HBP 2023 Para 5.13.
- For indigenous sourcing of capital goods, Specific EO is 25% lower while Average EO, where applicable, remains unchanged.
- Installation certificate is generally due within 3 years from completion of import under HBP 2023 Para 5.04(a).
- All second-hand capital goods and standalone computers/printers are not permitted under Appendix 5F.
- Older EPCG authorisations may be governed by the FTP/HBP provisions applicable to the policy period in which they were issued.
What Is the EPCG Scheme?
The Export Promotion Capital Goods (EPCG) Scheme is an export-promotion framework under Foreign Trade Policy 2023 that allows eligible exporters to import capital goods at zero customs duty, subject to the applicable Department of Revenue notification and export-obligation conditions. Eligible capital goods may be used for pre-production, production and post-production activities, subject to the restrictions in Appendix 5F.
The objective of EPCG is to facilitate access to capital goods that can improve the quality and competitiveness of goods and services produced in India. The scheme covers eligible manufacturer exporters, merchant exporters tied to supporting manufacturers, service providers and qualifying Common Service Providers.
What Is the Full Form of EPCG?
EPCG stands for Export Promotion Capital Goods. The term EPCG Scheme is also commonly written as EPCGS. The governing policy is Foreign Trade Policy 2023, while the detailed procedures are prescribed in the Handbook of Procedures.
| Term |
Meaning |
| EPCG |
Export Promotion Capital Goods |
| EPCGS |
Export Promotion Capital Goods Scheme |
| FTP 2023 |
Foreign Trade Policy 2023 |
| HBP |
Handbook of Procedures |
| EO |
Export Obligation |
| AEO |
Average Export Obligation |
| EODC |
Export Obligation Discharge Certificate |
| Scheme Code 12 |
Zero Duty EPCG Scheme, as listed in ICEGATE scheme references |
Which Authority Administers the EPCG Scheme?
The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, administers the EPCG Scheme. DGFT Regional Authorities process EPCG authorisations and related post-authorisation requests. Customs authorities implement the applicable duty treatment at import under the relevant customs notifications.
| Authority |
Role |
| DGFT |
Administers the EPCG Scheme and policy framework |
| DGFT Regional Authority (RA) |
Processes EPCG authorisation, amendments, EO-related applications and EODC |
| Ministry of Commerce and Industry |
Policy oversight |
| Customs / CBIC |
Implements customs clearance and applicable duty/tax notification at import |
Who Is Eligible for the EPCG Scheme?
FTP 2023 Para 5.02 covers manufacturer exporters, merchant exporters tied to supporting manufacturers and service providers. The scheme also covers qualifying Common Service Providers subject to the specific conditions prescribed in FTP/HBP. Applicants must hold a valid IEC and satisfy the applicable DGFT eligibility and declaration requirements.
| Applicant Type |
General Position |
| Manufacturer Exporter |
Eligible, subject to EPCG conditions and nexus between capital goods and export activity |
| Merchant Exporter |
Eligible when tied to supporting manufacturer(s) endorsed on the authorisation |
| Service Provider |
Eligible subject to EPCG coverage, IEC and capital-goods/service nexus |
| Common Service Provider (CSP) |
Eligible where certified by DGFT and subject to the conditions prescribed for CSPs |
| MSME Exporter |
Can apply if it otherwise satisfies EPCG eligibility; a separate MSME government-fee scale applies under Appendix 2K |
| Purely Domestic Business With No Export Path |
Generally not suitable because EPCG requires fulfilment of export obligation |
What Are the Key Benefits of the EPCG Scheme?
| Benefit |
What It Means |
| Zero Customs Duty |
Eligible capital goods may be imported at zero customs duty under EPCG, subject to the applicable customs notification and scheme conditions. |
| Indigenous Sourcing Benefit |
Capital goods may be sourced domestically. Specific EO is 25% lower for indigenous sourcing; Average EO, where applicable, remains unchanged. |
| Broad Capital-Goods Coverage |
Eligible capital goods can include machinery, embedded computer systems/software forming part of capital goods, spares, moulds, dies, jigs, fixtures, tools, refractories and specified catalysts, subject to Appendix 5F. |
| Early EO Fulfilment Incentive |
Where the conditions in FTP 2023 Para 5.09 are met, the remaining Specific EO may be condoned after prescribed early fulfilment. |
| Reduced EO for Green Technology Products |
FTP 2023 Para 5.10 provides reduced Specific EO for listed Green Technology Products, subject to the prescribed conditions. |
| Reduced EO for North East / J&K / Ladakh |
FTP 2023 Para 5.11 provides reduced Specific EO for eligible manufacturing units in the specified regions. |
Important: FTP 2023 Para 5.04(l) provides that only one of the specified benefits under Para 5.04(d), 5.09, 5.10 and 5.11 is admissible. These reductions should not be assumed to stack together.
Manufacturers still deciding whether EPCG fits a planned machinery upgrade can read our EPCG planning guide for machinery upgrade.
What Is Export Obligation Under the EPCG Scheme?
Export Obligation (EO) is the export commitment attached to an EPCG Authorisation. Under FTP 2023 Para 5.01(b), import under EPCG is generally subject to Specific EO equal to six times the duties, taxes and cess saved on the capital goods, to be fulfilled within six years from the date of issue of the authorisation.
How Is EPCG Export Obligation Calculated?
Specific Export Obligation = 6 x eligible duties, taxes and cess saved on the capital goods.
Illustrative example: If the total eligible duties, taxes and cess saved under the EPCG Authorisation are Rs. 5,00,000, the standard Specific EO would generally be Rs. 30,00,000, subject to the applicable EPCG provisions and any valid reduction that applies to the case.
For direct imports, FTP 2023 Para 5.08 links EO to the actual duty/taxes/cess saved amount. For domestic sourcing, EO is reckoned with reference to the notional customs duty/taxes/cess saved on the FOR value indicated in the ARO or Invalidation Letter.
What Is Average Export Obligation Under EPCG?
In addition to Specific EO, EPCG authorisations are generally subject to Average Export Obligation based on the arithmetic mean of exports in the preceding three licensing years for the same and similar products. AEO is to be maintained every financial year until the export obligation is completed, except where an exemption applies under FTP 2023 Para 5.12.
| EO Type |
General Rule |
Period |
| Specific EO |
Generally 6 x duties, taxes and cess saved |
Normally 6 years from authorisation |
| Average EO |
Average export level of the preceding 3 licensing years for same/similar products |
Maintained every financial year until EO completion, where applicable |
AEO exemption note: FTP 2023 Para 5.12 provides exemption from maintenance of Average Export Obligation for specified sectors including handicrafts, handlooms, KVIC industries, agriculture, aquaculture, animal husbandry, floriculture/horticulture, poultry, viticulture, sericulture, carpets, coir and jute, subject to the policy conditions.
How Does the 4+2 Block-Wise Export Obligation Work?
HBP 2023 Para 5.13 divides the six-year Specific EO period into two blocks while the applicable Average EO continues to be maintained.
| Block |
Period |
Minimum Specific EO |
| First Block |
Years 1-4 |
50% |
| Second Block |
Years 5-6 |
Balance EO |
HBP 2023 Para 5.14 separately requires online EO-fulfilment reporting after expiry of the first four-year block and continuously until the end of the valid EO period. This reporting rule should not be confused with the 4+2 block structure itself.
What Capital Goods Are Allowed Under EPCG?
FTP 2023 Para 5.01 covers eligible capital goods for pre-production, production and post-production, subject to the negative list and specific conditions in Appendix 5F.
| Category |
Coverage / Example |
| Capital Goods |
Eligible plant, machinery and equipment covered by the FTP definition, including CKD/SKD condition where applicable |
| Embedded Computer Systems / Software |
May be covered where they form part of the eligible capital goods being imported |
| Spares and Tooling |
Spares, moulds, dies, jigs, fixtures, tools and refractories |
| Catalysts |
Catalysts for initial charge plus one subsequent charge |
Which Capital Goods Are Not Permitted or Restricted Under EPCG?
| Item |
Appendix 5F Position |
| All Second-Hand Capital Goods |
Not permitted |
| Standalone Computers and Printers |
Not permitted |
| Motor Cars / SUVs / All-Purpose Vehicles |
Not permitted |
| Construction Materials such as sheds, cement and steel |
Not permitted |
| Certain vehicles, equipment, furniture and other items |
Permitted only for specified sectors or subject to specific conditions where Appendix 5F allows |
For machinery procurement planning and DGFT support, see our EPCG consultants for machinery purchase guide.
Can Capital Goods Be Sourced Domestically Under EPCG?
Yes. FTP 2023 Para 5.07 allows an EPCG Authorisation holder to source capital goods from a domestic manufacturer through an Invalidation Letter or an Advance Release Order (ARO). The domestic manufacturer may be eligible for deemed-export benefits under the applicable FTP/GST framework.
For indigenous sourcing, Specific EO is 25% lower than the standard EO while Average EO, where applicable, remains unchanged. Domestic supplies against an EPCG Authorisation may also qualify as deemed exports under the applicable GST framework; refund claimant selection and ITC treatment depend on the transaction structure and prescribed GST conditions.
For the detailed GST treatment and refund mechanics on domestic machinery, read our GST refund on machinery purchase guide.
What Is the Customs Duty Benefit Under EPCG?
FTP 2023 provides zero customs duty for eligible capital goods imported under EPCG. For physical exports, FTP 2023 also refers to exemption from IGST and Compensation Cess as provided in the notification issued by the Department of Revenue. Exporters should verify the current customs notification and transaction-specific treatment before import rather than assuming a blanket tax position from the EPCG authorisation alone.
What Documents and Information Are Required for EPCG Authorisation?
The EPCG application is filed in ANF 5A. The exact documents depend on applicant type and the transaction. The current ANF 5A guidelines identify the following core uploads/information, with additional documents required in specified cases.
| Document / Information |
General Purpose |
| IEC and DGFT profile details |
Applicant identification and online filing |
| Applicable registration proof |
Self-certified MSME/IEM/LOI/IL for product applicants or GST Registration for service providers, as applicable under ANF 5A |
| Chartered Engineer Nexus Certificate - Appendix 5A |
Establishes the nexus considered by the RA between proposed capital goods and export product/service |
| CA / Cost Accountant / Company Secretary Certificate - Appendix 5B |
Supports export-performance / financial particulars prescribed in the EPCG application |
| Export performance details |
Used for Average EO and application particulars where applicable |
| Capital-goods particulars |
Description, HS code, quantity/value and other transaction particulars required in the application workflow |
| RCMC / supporting-manufacturer / CSP details |
Where applicable to the applicant structure |
| Case-specific documents |
For restricted goods, spares/tools/refractories/catalysts, de-bonding EOU/SEZ cases and other special situations |
A proforma invoice or supplier quotation may be commercially useful for preparing capital-goods particulars, but it should not be described as a universal mandatory ANF 5A upload unless the current DGFT workflow specifically requires it for the case.
What Is the EPCG Application Fee?
DGFT application fees are prescribed in Appendix 2K and may be revised. The current fee scale for Advance Authorisation / DFIA / EPCG Authorisation distinguishes MSME and non-MSME applicants.
| Applicant |
Current Appendix 2K Fee Scale |
| MSME - CIF value / duty saved amount up to Rs. 1 crore |
Rs. 100 |
| MSME - above Rs. 1 crore |
Rs. 5,000 |
| Non-MSME |
Rs. 1 per thousand or part thereof on CIF value / duty saved amount, subject to a minimum of Rs. 500 and maximum of Rs. 1,00,000 |
Professional or consultant fees, if any, are separate from the government application fee. Always verify the current Appendix 2K schedule on DGFT before payment.
How to Apply for EPCG Authorisation: Step-by-Step
- Confirm that the applicant holds a valid IEC and fits the EPCG coverage under FTP 2023.
- Identify the proposed capital goods and the export product/service for which EPCG is being considered.
- Review Specific EO, Average EO and any applicable reduction/exemption before filing.
- Obtain the Chartered Engineer nexus certificate in Appendix 5A and the professional certificate in Appendix 5B, along with other applicable documents.
- Complete and file ANF 5A online through the DGFT portal and pay the applicable Appendix 2K fee.
- Respond to any clarification raised by the concerned DGFT Regional Authority and obtain the EPCG Authorisation.
- Use the authorisation for the approved import or domestic procurement route in accordance with the authorisation and applicable customs/DGFT procedure.
- Install the capital goods and submit the installation certificate within the applicable timeline.
- Track Specific EO, Average EO, the 4+2 block requirement and EO-fulfilment reporting during the authorisation period.
- After fulfilment of the applicable conditions, apply to the concerned RA for EODC / redemption with the prescribed supporting records.
For filing and post-authorisation support, see GetMyCA's EPCG Scheme Registration & Compliance service.
What EPCG Compliance Must Be Tracked After Authorisation?
| Compliance Area |
Current Position |
| Installation Certificate |
Generally submit to the concerned RA within 3 years from completion of import. HBP 5.04(a) permits extension up to the valid EO period with the prescribed composition fee. |
| Specific EO |
Track the 4+2 block structure under HBP 5.13: 50% in Years 1-4 and the balance in Years 5-6. |
| EO Fulfilment Reporting |
HBP 5.14 requires online reporting after the first four-year block and continuously until expiry of the valid EO period. |
| Average EO |
Maintain the applicable AEO every financial year unless an FTP 5.12 exemption applies. |
| Actual User Condition |
Capital goods remain subject to Actual User condition until EO is completed and EODC is granted. |
| EO Extension |
Extensions may be considered under HBP 5.16 subject to the prescribed conditions, timelines and fees; they should not be assumed as automatic. |
Older EPCG authorisations: FTP 2023 Para 5.13 provides that authorisations issued under earlier policy periods may continue to be governed by the corresponding FTP/HBP provisions applicable to those authorisations, unless specifically stated otherwise. Existing authorisation holders should therefore check the policy period applicable to their licence before relying on a current-rule summary.
EPCG Scheme vs Advance Authorisation: What Is the Difference?
| Parameter |
EPCG Scheme |
Advance Authorisation |
| Primary purpose |
Capital goods for export production / service activity |
Inputs used in export production |
| Typical import |
Machinery, equipment and other eligible capital goods |
Raw materials, components and inputs |
| FTP chapter |
Chapter 5 |
Chapter 4 |
| Export obligation |
Generally linked to 6x duties, taxes and cess saved, plus AEO where applicable |
Linked to export of resultant product under the applicable AA conditions |
| Use case |
Capacity creation, production modernisation or eligible capital-goods requirement |
Duty-free input sourcing for export production |
Duty Drawback, RoDTEP and RoSCTL operate under separate frameworks. FTP 2023 Para 5.04(e) nevertheless provides that exports under Advance Authorisation, DFIA, Duty Drawback, RoSCTL and RoDTEP may also be eligible for fulfilment of EPCG export obligation, subject to the applicable conditions.
Common EPCG Compliance Mistakes to Avoid
| Mistake |
Why It Is Risky |
Safer Approach |
| Calculating EO only on BCD |
FTP links Specific EO to duties, taxes and cess saved |
Use the eligible duty/tax/cess saved amount applicable to the transaction |
| Treating second-hand machinery as EPCG-eligible |
Appendix 5F lists all second-hand capital goods as not permitted |
Check Appendix 5F before finalising capital goods |
| Treating standalone computers/printers as eligible |
Appendix 5F lists computers and printers as not permitted |
Only treat computer systems/software as covered where they form part of eligible capital goods |
| Confusing 4+2 fulfilment with EO reporting |
HBP 5.13 and 5.14 deal with different requirements |
Track block-wise fulfilment and reporting separately |
| Missing installation certificate timeline |
Can delay compliance and require extension/composition fee |
Plan installation evidence and filing within the current HBP timeline |
| Ignoring Average EO |
Specific EO alone may not discharge the authorisation where AEO applies |
Track AEO every financial year unless a valid exemption applies |
| Starting EPCG-linked import/domestic procurement before authorisation structure is in place |
The transaction may not qualify for the intended EPCG treatment |
Complete EPCG eligibility and authorisation planning before proceeding with the EPCG-linked transaction |
| Transferring capital goods before EODC |
Can violate the Actual User condition |
Maintain the capital goods in accordance with the Actual User requirement until EODC |
| Applying current FTP rules blindly to an old authorisation |
Older licences can be governed by the policy period in which they were issued |
Check the applicable FTP/HBP period and transitional provisions |
Frequently Asked Questions
Q1. What is the EPCG Scheme under DGFT?
The EPCG Scheme is an export-promotion scheme under FTP 2023 Chapter 5 that allows eligible capital goods to be imported at zero customs duty, subject to export-obligation and other scheme conditions.
Q2. Who can apply for EPCG authorisation?
Manufacturer exporters, merchant exporters tied to supporting manufacturers, service providers and qualifying Common Service Providers can be covered, subject to the conditions in FTP 2023 and HBP.
Q3. How long is an EPCG Authorisation valid for import?
FTP 2023 Para 5.01(d) provides a 24-month import validity from the date of issue. Revalidation of the EPCG Authorisation is not permitted.
Q4. What is the standard EPCG export obligation period?
The standard Specific EO is generally six times the duties, taxes and cess saved and is to be fulfilled within six years from the date of issue of the authorisation, subject to applicable EPCG provisions.
Q5. How does the 4+2 EPCG export-obligation structure work?
Under HBP 2023 Para 5.13, 50% of Specific EO is to be fulfilled in the first block covering Years 1-4, with the balance in Years 5-6.
Q6. What is the installation certificate deadline under EPCG?
HBP 2023 Para 5.04(a) generally requires the installation certificate within 3 years from completion of import. The RA may allow extension up to the valid EO period on payment of the prescribed composition fee.
Q7. Is second-hand machinery allowed under EPCG?
No. Appendix 5F lists all second-hand capital goods as not permitted under the EPCG Scheme.
Q8. Are computers allowed under EPCG?
Standalone computers and printers are not permitted under Appendix 5F. FTP 2023 can cover computer systems and software where they form part of the eligible capital goods being imported.
Q9. Can capital goods be purchased from an Indian manufacturer under EPCG?
Yes. FTP 2023 Para 5.07 allows domestic sourcing through an Invalidation Letter or Advance Release Order, subject to the applicable conditions. Indigenous sourcing also carries a 25% reduction in Specific EO, with no change in AEO where applicable.
Q10. Which sectors are exempt from maintaining Average Export Obligation?
FTP 2023 Para 5.12 provides AEO exemption for specified sectors such as handicrafts, handlooms, KVIC industries, agriculture, aquaculture, animal husbandry, floriculture/horticulture, poultry, viticulture, sericulture, carpets, coir and jute, subject to the stated conditions.
Q11. Can exports under RoDTEP or RoSCTL count toward EPCG export obligation?
Yes. FTP 2023 Para 5.04(e) provides that exports under Advance Authorisation, DFIA, Duty Drawback, RoSCTL and RoDTEP may also be eligible for fulfilment of EPCG EO, subject to the applicable scheme conditions.
Q12. What happens if EPCG export obligation is not fulfilled?
Unfulfilled EO can lead to duty and interest consequences and may require extension or other action under the applicable HBP provisions. The exact treatment depends on the authorisation, shortfall and timing, so the current DGFT/customs position should be checked before acting.
Q13. What is the EPCG application fee?
Under the current Appendix 2K, MSME applicants pay Rs. 100 up to Rs. 1 crore CIF value/duty saved amount and Rs. 5,000 above Rs. 1 crore. For non-MSMEs, the fee is Rs. 1 per thousand or part thereof, subject to a minimum of Rs. 500 and maximum of Rs. 1,00,000. Verify the current schedule before filing.
Q14. Is the EPCG Scheme still available in 2026?
Yes. The EPCG Scheme remains part of Foreign Trade Policy 2023. Applications and compliance should be handled according to the current FTP, HBP, DGFT forms and applicable customs notifications.
Need Help With EPCG Registration or Compliance?
GetMyCA supports eligible exporters with EPCG eligibility assessment, DGFT application filing, export-obligation monitoring, installation-certificate support and EODC-related compliance.
Call: +91 92174 87001
Email: hello@getmyca.com
WhatsApp: wa.me/919217487001
Website: www.getmyca.com
Official Sources
About the Author
Paras Nagpal
Business Consultant, GetMyCA
Email: paras@getmyca.com | Phone: +91 92174 87001
Reviewed by: GetMyCA Export & Compliance Advisory Team
Last Reviewed: 1 September 2026
Disclaimer
This page is for general informational purposes only. EPCG eligibility, export-obligation requirements, application fees, customs treatment and DGFT procedures may vary by case and may change over time. Read the information together with the applicable Foreign Trade Policy, Handbook of Procedures, DGFT forms/public notices and current customs/GST notifications relevant to the transaction. Older authorisations may also be governed by earlier policy provisions. Verify the current regulatory position before acting.
About GetMyCA
GetMyCA Consultants Private Limited is a business consulting firm based in New Delhi, supporting clients across India with registrations, tax and GST compliance, export documentation, subsidy advisory and related regulatory services.
Office: NS-21, LGF, Mianwali Nagar, Near Peeragarhi Metro Station, New Delhi - 110087
Website: www.getmyca.com | Email: hello@getmyca.com | Phone: +91 92174 87001