Export obligation under epcg license

In its recent paper on export strategy published in August, , the CII has suggested calibrating import duties carefully.

The EPCG Scheme Export Promotion Capital Goods is a foreign trade policy that allows an import-export business to import capital goods from foreign countries without any kind of custom duty charges imposed on them.

Under the EPCG Scheme, the respective import-export business uses the goods imported to manufacture products. Export of these products generates revenue worth six times the amount saved on customs duty, in the form of foreign currency. This is achieved within a period of six years from the issuance of the EPCG authorization.

Capital goods imported for the production of export goods. Hence, the EPCG scheme applies to;. Such imports are made under an EO, which must be six times the duty that would otherwise be paid on the import of the capital goods. Some conditions for EPCG export obligation calculation are to be fulfilled as follows:.

The export obligation under EPCG shall be over and above the average export volume for the previous three licensing years for the product s similar to it within the EO period, including extensions if any. The benefits of deemed exports are also available to the exporter. An authorisation received under the EPCG scheme remains active for 18 months from the date of its issue, and cannot be revalidated thereafter.

Exporters of electronic goods can also avail of EPCG benefits. Domestic sourcing from export-oriented units is also permitted under the scheme. An EPCG authorisation holder can opt for technological upgradation of capital goods that have been procured under the scheme. Heavy exporters are naturally better placed to fulfil this obligation and benefit from the EPCG. For example, you create an EPCG incentive scheme that has two blocks.

The total period for the incentive scheme is eight years. The original period for Block 1 is five years, followed by Block 2 for three more years. When you extend Block 1 to six years, Block 2 is changed to two years, and the starting date of Block 2 is the day after the ending date for Block 1. The total period for all blocks is still eight years. If you extend all blocks, the ending date for all of them is extended by the selected length of time, and the total period for the incentive scheme is also extended.

The starting date for the second block and each subsequent block is updated to one day after the ending date of the previous block.

For example, you create an EPCG incentive scheme that has three blocks. The original length of time for each block is 24 months and the total export obligation period is six years. When you extend all blocks by four months, all blocks are changed to 28 months.

Block 2 starts on the first day of the twenty-ninth month, and Block 3 starts on the first day of the fifty-seventh month.