DGFT scheme allowing duty-free import of capital goods (machinery, equipment) tied to a multi-year Export Obligation.
Definition
The EPCG — Export Promotion Capital Goods Scheme — is a DGFT scheme allowing Indian exporters to import capital goods (machinery, tools, equipment) at zero customs duty, tied to an Export Obligation of 6× the duty saved, to be met within 6 years.
How it works
Exporter identifies capital goods needed for manufacturing export products
Applies for EPCG authorisation via DGFT portal, specifying the equipment and expected exports
DGFT issues authorisation with a fixed Export Obligation (in USD or INR)
Exporter imports the capital goods duty-free
Over the next 6 years, exports of the eligible products count toward the Export Obligation
Fulfilment evidenced via eBRCs; final EO discharge notified to DGFT
Compliance requirements
Block-wise EO fulfilment — first block (years 1-4) requires 50% of EO; second block (years 5-6) the remaining 50%
Annual reporting to DGFT with eBRC evidence
Non-fulfilment attracts full customs duty (retroactively) + interest at 15%+ per annum
For Indian FBA exporters
EPCG makes sense if you're investing in equipment for a manufacturing operation that will primarily serve export markets. Common examples: sewing machines for apparel exports, packaging automation for bulk shipments, printing equipment for private-label goods.
For pure resellers with no manufacturing investment, EPCG isn't relevant. For manufacturer-exporters, the 6-year runway is generous but the annual reporting overhead is real — factor it into your compliance calendar.