EPCG Scheme 2026: How to Import Capital Goods at Zero Duty

What is the EPCG Scheme?

The Export Promotion Capital Goods (EPCG) scheme allows Indian exporters to import capital goods — machinery, equipment, components, spares, and tools — at zero Basic Customs Duty (BCD), subject to fulfilling an export obligation (EO) equivalent to 6 times the duty saved, within 6 years from the date of authorization.

This scheme is designed to help Indian exporters upgrade their manufacturing technology and compete globally without the burden of high import duties on capital equipment.

Who Can Apply for EPCG?

• Manufacturer exporters
• Merchant exporters tied to supporting manufacturers
• Service providers in hospitality, healthcare, transport, and other notified sectors
• Common Service Providers (CSPs) creating infrastructure for exporters

What Capital Goods are Covered?

Capital goods under EPCG include any plant, machinery, equipment, accessories, tools, jigs, fixtures, dies, and moulds — new or refurbished (subject to conditions). Even second-hand capital goods can be imported under EPCG if independently valued and meeting the condition that they have at least 5 years of residual life.

Step-by-Step EPCG Application Process

Step 1 — Pre-Application: Identify the capital goods to be imported, determine the CIF value, and calculate the duty saved (BCD + applicable cess). The export obligation will be 6x the duty saved.

Step 2 — File Application on DGFT Portal: Submit the EPCG application online at dgft.gov.in with the required documents — IEC, RCMC, GST certificate, audited financial statements, and proforma invoice of capital goods.

Step 3 — License Issuance: The DGFT Regional Authority processes the application and issues the EPCG Authorization, specifying the EO amount and validity period.

Step 4 — Import Capital Goods: Use the EPCG Authorization to import the capital goods, citing the authorization number in the Bill of Entry. Customs will waive the BCD.

Step 5 — Installation Certificate: After installation, obtain an Installation Certificate from a Chartered Engineer and submit it to the DGFT within 6 months of import.

Step 6 — Fulfill Export Obligation: Export goods worth 6x the duty saved within 6 years. Maintain records of all exports used to fulfill the EO.

Step 7 — Apply for Redemption (EODC): After fulfilling the EO, apply for Export Obligation Discharge Certificate (EODC) on the DGFT portal. This closes your EPCG license.

Consequences of Not Fulfilling EO

If you fail to meet the EO within the prescribed period, you must pay the duty saved along with 15% interest per annum from the date of import. This can be very costly, so proper EO planning and monitoring is essential — something our team at Soumya Enterprises specialises in.