The EPCG stands for Export Promotion Capital Goods, The government has initiated this scheme basically to allow the exporters to import goods which include the spares of the pre-production, production, and pre-production process, in which there is an exemption to pay any customs duty. Therefore if you are into the business of export and import and wish to know further about the provision of EPCG, here we provide you with a step-by-step process, what are its advantages, the procedure to avail it, and overall information regarding EPCG.
Overview of the EPCG Scheme
The Government has given the scheme of EPCG in order to provide incentives and export promotion and also aims to provide financial incentives to the exporters for the purpose of exporting the goods which may include the machinery or the products related to it. The main purpose behind this scheme is to focus on quality goods production in India and exporting it to other nations which in turn contributes to the overall growth of the economy.
Advantages of the EPCG scheme
The EPCG scheme is introduced by the Director General of Foreign Trade in order to provide financial benefits to the exporters by providing them the financial assistance. The various benefits of this scheme are mentioned below-
- Under this scheme, there is a provision for duty-free imports of goods. It means there is no obligation to pay the duty charges, The requirement of the export obligation equal to six times the saving amount duty on capital goods is met within 6 years time.
- As mentioned above it provides financial help by eliminating the import charges, which contributes to the effectiveness of cost.
- It supports more and more investment which may help in improving the Environmental, Social, and Governance (ESG) score, which will draw the attention of the investors in your business.
- It contributes to better efficiency as it creates avenues for new machinery or the new upcoming technology which will make your business more effective and more competitive as compared to other businesses.
Who is Eligible for EPCG Licence?
The Eligible entities to obtain the EPCG license are mentioned under the following categories-
Merchant Exporters– The Merchant Exporters usually purchase goods from the manufacturer and then they sell or export with their own brand or the trading house. In order to do so, they must connect with the specific manufacturers who use the imported goods under the EPCG scheme.
Manufacturer Exporters– Those businesses directly involved in manufacturing, have an option of manufacturing the goods to be exported rather than focusing on the domestic market. So they can avail of the EPCG scheme to import capital goods and improve their factories basically to increase their efficiency and output.
Service Providers– under this provision you may be eligible for this EPCG scheme if your company offers the services to the people.
According to Foreign Trade Policy, the four modes are mentioned below-
Mode 1– Cross-Border Trade- Providing services from India to other countries.
Mode 2– Consumption Abroad- Providing service from India to service consumers of the other country.
Mode 3-Commercial presence- Providing service from India through its commercial presence in any other country.
Mode 4- Presence of natural person- providing service from India by sending employees to any other nation.
Documents Required for Obtaining EPCG License
The following Documents are required in order to obtain the EPCG license-
- Import Export Code (IEC)
- Digital Signature
- Pan card
- Registration cum membership certificate
- Registration certificate from the Tourism Department
- Excise Registration (If applicable)
- GST Registration Certificate
- Brochure
- Performa-Invoice
- Self-certified original copy of the certificate of Chartered Accountant
- Self-certified original copy of certificate of Chartered Engineer
Conclusion
In short, we can say that the EPCG scheme plays a very important role in encouraging businesses to promote international trade or engage in it. This scheme contributes greatly to the overall growth of the Indian Economy by providing provisions like duty-free financial help or assistance, therefore this can prove to be very profitable if it is utilized properly. Thus, it is very important to understand the export obligation and make sure to fulfill all the terms and conditions.
