What Is the Export Promotion Capital Goods (EPCG) Scheme?

The EPCG scheme allows an exporter to import capital goods for pre-production, production and post-production at zero customs duty (FTP 2023 para 5.01(a)). Goods imported for physical exports are also exempt from IGST and Compensation Cess. In exchange, the exporter accepts an export obligation and an actual user condition until the obligation is discharged.

• Capital goods: Plant, machinery, equipment or accessories used to make goods or render services, including testing, R&D and pollution control equipment (FTP 2023 para 11.08). EPCG also covers computer systems and software forming part of the capital goods, spares, moulds, dies, jigs, tools, refractories and catalysts for the first and one later charge (FTP 2023 para 5.01(a)).
• Negative list: Items in Appendix 5F cannot be imported under EPCG. Restricted import items need approval from the Exim Facilitation Committee at DGFT headquarters (FTP 2023 para 5.01(a) and (f)).
• Import window: The authorisation is valid for imports for 24 months from the date of issue, and it cannot be revalidated (FTP 2023 para 5.01(d)).
• Obligation: Exports worth 6 times the duties, taxes and cess saved, to be completed within 6 years from the date of issue (FTP 2023 para 5.01(b)).
• Actual user: The capital goods must be used by the authorisation holder until the export obligation is completed and the EODC is granted (FTP 2023 para 5.03).
• Domestic sourcing: Capital goods can also be bought from an Indian manufacturer through an Invalidation Letter or Advance Release Order, and the specific obligation is then 25% lower (FTP 2023 paras 5.04(d) and 5.07).

EPCG is a DGFT scheme under the Foreign Trade Policy 2023, in force from 1 April 2023. RBI does not run the scheme, but RBI rules decide when export proceeds count as realised, and only realised exports count towards the obligation. See also Foreign Trade Policy 2023 changes.

Manufacturer exporters, merchant exporters tied to supporting manufacturers and service providers can apply for an EPCG authorisation (FTP 2023 para 5.02(a)). Common Service Providers certified by DGFT in a Town of Export Excellence or PM MITRA park are also covered, subject to extra conditions such as a bank guarantee equal to the duty saved.

The EPCG scheme works in stages: apply to the DGFT Regional Authority, import or source the capital goods, install them, export over the block periods, then apply for the Export Obligation Discharge Certificate. The application is filed in ANF 5A with a Chartered Engineer's nexus certificate (HBP 2023 paras 5.02 and 5.03).

1. Apply to the Regional Authority (RA) in ANF 5A from the registered office, head office, branch or manufacturing unit (HBP para 5.02).
2. Attach a nexus certificate in Appendix 5A from an independent Chartered Engineer linking the capital goods to the export product or service (HBP para 5.03(a)).
3. Import within 24 months of issue, through the single port of registration on the authorisation (HBP para 5.05), or ask the RA for an Invalidation Letter or ARO to buy from an Indian maker (HBP para 5.09).
4. Submit an installation certificate from jurisdictional Customs or an independent Chartered Engineer within 3 years of completing imports (HBP para 5.04).
5. Export at least 50% of the specific obligation in years 1 to 4 and the balance in years 5 and 6, while also maintaining the average export obligation each financial year (HBP para 5.13(a)).
6. Tell the RA about block-wise fulfilment within three months of the end of each block (HBP para 5.13(b)).
7. Apply online for the EODC in ANF 5B with proof of exports (HBP para 5.20(a)).

The main EPCG deadlines are 24 months to import, 3 years after import to file the installation certificate, 4 years for the first block and 6 years for the full obligation. Extensions beyond 6 years are allowed as two one-year extensions or one two-year extension, with a composition fee based on duty saved (HBP para 5.16(b)).

If an EPCG authorisation holder does not meet the export obligation, it must pay customs duty, taxes and cess in proportion to the shortfall, with interest as Customs prescribes (HBP para 5.21(b)). Failure to meet the obligation or any other condition can also lead to action under the FT (D&R) Act, 1992 and the Customs Act, 1962 (HBP para 5.24).

• First block: If the 50% first-block target is missed and not extended, duty proportionate to the first-block shortfall, with interest, is due within 6 months of the block ending (HBP para 5.13(c)).
• Domestic sourcing: For capital goods bought through an Invalidation Letter or ARO, the amount payable uses the notional duty on the FOR value (HBP para 5.21(c)).
• Self-payment: Duty and interest can be paid provisionally on your own calculation using the procedure in HBP para 4.50 (HBP para 5.21(e)).
• Surrender: An unused authorisation can be surrendered at any time with no penalty or fee (HBP para 5.21(a)).
• Unrealised proceeds: Exports whose proceeds are not realised do not count. RBI's period for realisation is nine months from shipment or invoice (twelve months if invoiced or settled in rupees), and your AD bank may extend it (FEMA 23(R)/2026-RB, Regulation 5). See export realisation period.

If you expect a shortfall, apply for an extension within 6 months of the block or EO period ending to keep fees lowest (HBP paras 5.13(c) and 5.16(c)). If exports will not be completed, pay the proportionate duty and interest to exit the scheme (HBP para 5.21(b)). For complex cases, speak to your Regional Authority.

The EPCG scheme is set by DGFT in Chapter 5 of the Foreign Trade Policy 2023 and Chapter 5 of the Handbook of Procedures. RBI has no EPCG circular, but the FEMA (Export and Import of Goods and Services) Regulations, 2026, in force from 1 October 2026, govern realisation of the export proceeds that count (FEMA 23(R)/2026-RB).

• Ignoring average: Counting all exports towards the specific obligation. Only exports above the average export obligation count (FTP para 5.04(c)).
• Missed block: Waiting until year 6 to check progress. The 50% first-block target has its own deadline and duty consequence.
• Late extension: Applying for an extension more than 6 months after the block or EO period ends, which means a higher block composition fee or an extra late fee (HBP paras 5.13(c) and 5.16(c)).
• Moving machinery: Shifting capital goods to another unit without filing a fresh installation certificate within six months (HBP para 5.04(a)).
• Third-party gaps: Exporting through a merchant without the authorisation number on the shipping bill or without the third party's disclaimer certificate.
• Unrealised exports: Counting invoices that are still unpaid. Track realisation on the e-BRC on DGFT and with your AD bank.
• Stacking benefits: Claiming two reductions, such as domestic sourcing and green technology, on one authorisation. Only one is allowed.

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Foreign Trade Policy 2023, Chapter 5: Export Promotion Capital Goods (EPCG) Scheme (DGFT), Paras 5.00 to 5.13 (checked 8 Oct 2026)
2. Handbook of Procedures 2023, Chapter 5: EPCG Scheme (DGFT, updated copy), Paras 5.02 to 5.26 (checked 8 Oct 2026)
3. Foreign Trade Policy 2023, Chapter 1: Legal Framework (DGFT), Para 1.01 (checked 8 Oct 2026)
4. Foreign Trade Policy 2023, Chapter 11: Definitions (DGFT), Para 11.08 (checked 8 Oct 2026)
5. RBI Notification FEMA 23(R)/2026-RB: FEMA (Export and Import of Goods and Services) Regulations, 2026, Regulation 5 (checked 8 Oct 2026)