How to Apply for EPCG
The Export Promotion Capital Goods (EPCG) scheme allows exporters to import capital goods — machinery, equipment, and components used for pre-production, production, and post-production — at zero (or concessional) customs duty, subject to fulfilling an export obligation equal to 6 times the duty saved, within 6 years from the date of authorisation. It applies equally to manufacturer exporters, merchant exporters tied to supporting manufacturers, and eligible service providers such as hotels, hospitals, and software or R&D establishments. Because the authorisation is non-transferable and tied to actual use of the imported goods, the scheme demands disciplined record-keeping across its full 6-year lifecycle, not just at the application stage. Used well, it is one of India's most powerful export-financing tools; used carelessly, it can trigger duty-plus-interest demands years after import. This guide walks through the DGFT application, customs registration, and obligation-discharge process end to end.
Before you start
- IEC (Import Export Code)
- RCMC from the relevant Export Promotion Council
- Details of the capital goods to be imported (HS codes, CIF value, technology, supplier quotation)
- Average annual export performance for the past 3 years, supported by bank realisation certificates or DGFT export data
- Chartered Accountant certificate confirming export turnover figures
- No outstanding EPCG or Advance Authorisation defaults or show-cause notices pending with DGFT
- Digital signature certificate (Class 3) registered on the DGFT portal for the authorised signatory
- GST registration and, where applicable, a bond or bank guarantee arrangement pre-approved with the jurisdictional customs house
Step-by-step
Assess Export Obligation Feasibility
Calculate the export obligation: 6x the duty saved on the CIF value of capital goods at applicable import duty rates. Assess whether your business can realistically achieve this export level within 6 years, factoring in ramp-up time for new machinery to reach production capacity.
- Model at least two scenarios (base case and conservative case) before committing
- Underestimating the obligation risks penalties and interest on any shortfall at the end of the 6-year window
Decide Between Standard EPCG and Post-Export EPCG
Most applicants use the standard (pre-import duty exemption) EPCG route. A separate Post-Export EPCG Duty Credit Scrip variant exists, where duty is paid upfront on import and refunded as a transferable scrip once the export obligation is met — this can suit exporters who prefer not to execute a bond or bank guarantee at import stage. Confirm which variant fits your cash-flow position with the current FTP notification before applying, as eligibility conditions differ.
Log in to DGFT Portal and Select EPCG
Visit dgft.gov.in and navigate to the EPCG authorisation module under 'Import/Export'. Select 'Fresh EPCG Authorisation' and choose whether the capital goods are for manufacturing, services, agriculture, or aquaculture.
Fill Form ANF-5A and Upload Documents
Complete Form ANF-5A with details of the capital goods (HS codes, specification, CIF value) and your average export performance. Upload: IEC, RCMC, last 3 years' export data from DGFT or bank certificates, and the Chartered Accountant certificate of export turnover.
Double-check the capital goods description against the DGFT's excluded-items list — second-hand machinery, consumer goods, and certain restricted items are not eligible even if functionally used for export production.
Pay Application Fee and Submit
Pay the DGFT application fee online — official filing fees apply and are typically linked to the duty saved value, so confirm the current fee schedule on the DGFT portal before submission. Submit the application. DGFT Regional Authority typically processes EPCG applications within roughly 3-4 weeks of a complete, query-free submission; pre-import EPCG applications may be issued before the goods arrive at port.
Respond to Regional Authority Queries
DGFT may raise clarification queries on the CIF valuation, export performance data, or classification of goods. Respond promptly through the portal — unanswered queries are a common cause of applications lapsing or being delayed well beyond the normal processing window.
Register Authorisation with Customs
Once the EPCG authorisation is issued, register it with the customs office at the port of import before the goods arrive. This typically requires executing a bond and, unless you qualify for a relaxation (such as status holder or certain export-oriented categories), a bank guarantee equal to a percentage of the duty saved. The customs officer endorses the authorisation, allowing duty-free (or concessional) clearance.
Import Capital Goods Within the Authorisation Validity
The EPCG authorisation carries its own import validity period (24 months from the date of issue under the current FTP 2023 Handbook of Procedures, extendable on application). Import the listed capital goods within this window; goods imported after expiry without an extension will not receive the duty benefit.
Obtain the Installation Certificate
After installing the imported capital goods, obtain an installation certificate from the jurisdictional GST/Central Excise authority or an independent chartered engineer within the timeframe prescribed by the authorisation (commonly within 6 months of import completion) and file it with DGFT. This certificate is a standard condition of the authorisation and is checked at the time of obligation discharge.
Fulfil Export Obligation and Maintain Records
Export goods worth 6x the duty saved within 6 years from the date of authorisation. Maintain shipping bills, bank realisation certificates, and annual export performance statements against the authorisation number.
- File the mandatory annual export obligation statements with DGFT — do not wait until year 6 to consolidate records
- Keep the installation certificate, bond/bank guarantee documents, and customs registration papers together for the full obligation period
File the EODC (Export Obligation Discharge Certificate)
After completing the obligation, file for the Export Obligation Discharge Certificate (EODC) with DGFT promptly, supported by export documents and the CA certificate of export performance. Once DGFT issues the EODC, present it to customs to obtain redemption of the bond/bank guarantee executed at registration. If the obligation cannot be met on schedule, apply for an extension (subject to a composition fee) before the deadline rather than after.
Common mistakes to avoid
- Importing capital goods before registering the authorisation with Customs — duty exemption is only available after Customs registration, and goods cleared without it attract full duty.
- Misidentifying eligible capital goods — second-hand machinery and certain consumer goods are excluded from EPCG.
- Not maintaining year-wise export obligation records — DGFT expects exports to build up progressively over the 6-year window and can flag applications that show no meaningful progress in the early years.
- Failing to obtain and file the installation certificate on time — this is a standard authorisation condition and its absence complicates EODC filing later.
- Letting the bond or bank guarantee lapse or expire without renewal while the export obligation is still outstanding.
- Delaying EODC filing after the obligation is actually fulfilled — unnecessary delay can complicate bond/BG redemption and invites avoidable DGFT correspondence.
- Treating the CIF valuation loosely at application stage — an understated or overstated value distorts the calculated export obligation and can trigger queries or reassessment.
- Assuming EPCG import benefits automatically extend to IGST — depending on the notification in force, IGST and compensation cess on import may still be payable separately from basic customs duty; confirm the current position before budgeting.
Frequently asked questions
Can domestic manufacturers use the EPCG scheme?
Yes. The scheme allows importation of capital goods from foreign manufacturers as well as procurement from domestic manufacturers, who in turn can claim deemed export benefits on that supply.
What happens if I cannot meet the export obligation?
If the obligation is not fulfilled within the stipulated period, customs duty on the shortfall becomes payable along with interest — historically prescribed around 15% per annum under the relevant customs notification, though the applicable rate should be confirmed against the current notification at the time of default. DGFT can also initiate penalty proceedings on the unfulfilled portion.
Can EPCG be used for services exporters?
Yes. Service exporters, including hotels, hospitals, R&D establishments, and software exporters, can obtain EPCG authorisations for equipment and technology used in rendering export services, subject to the applicable eligibility conditions for service providers.
Is EPCG compatible with other export schemes?
EPCG can generally be combined with Advance Authorisation (for inputs), but the export obligation under both schemes must be fulfilled separately — supplies counted toward an Advance Authorisation's export obligation cannot simultaneously be counted toward EPCG.
How long is an EPCG authorisation valid for importing goods?
The authorisation carries its own import validity period, 24 months from the date of issue under the current FTP 2023 Handbook of Procedures, and can usually be extended on application before expiry. This is separate from the 6-year export obligation period, which runs from the date of authorisation.
Is a bank guarantee always required at customs registration?
Not always. Certain categories of exporters, including status holders and specific export-oriented categories, may qualify for a relaxation or waiver of the bank guarantee requirement, though a bond is still typically executed. Confirm eligibility for any relaxation with your customs house at the time of registration.
Can an EPCG authorisation be transferred or the goods sold before the obligation is discharged?
No. Capital goods imported under EPCG are subject to actual-user conditions and cannot generally be transferred, sold, or leased until the export obligation is fulfilled and the EODC is issued, except through specific DGFT-permitted mechanisms.
What documents are needed to file the EODC?
Typically the EPCG authorisation copy, installation certificate, shipping bills or export documents corresponding to the obligation period, bank realisation certificates, and a Chartered Accountant certificate confirming the total export performance against the authorisation.
Can spare parts be imported under an existing EPCG authorisation?
Spares, moulds, dies, jigs, fixtures, and similar items linked to the capital goods already covered under the authorisation can generally be imported under EPCG, subject to conditions in the authorisation and current DGFT guidelines — confirm scope before ordering spares against an existing licence.
What if the export obligation period expires before it is fully met?
An extension can be requested from DGFT before the deadline, generally on payment of a composition fee, rather than waiting until after default. Applying after the obligation period has already lapsed significantly weakens the case and increases exposure to duty-plus-interest demands.
Does EPCG cover only new capital goods?
Generally yes — the scheme is designed for new capital goods; second-hand machinery is excluded from the standard EPCG benefit. Always verify the eligible goods list before finalising a supplier quotation.
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