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EPCG Scheme & EPCG License – Benefits & Registration Process

EPCG Scheme is one of the most effective ways of growing a business is by exporting high-quality goods and services to an international market. Nevertheless, the increasing expenses of expanding and upgrading operations may serve as a serious obstacle in sustaining the competitive edge. While the growth and development of a company should be invested in, it is equally important to make sure that these investments will be financially sustainable and that the business will not get stuck and be unable to adjust to the dynamic market.

These are arguably the hardest part of the equation because you will incur customs duties in order to import advanced machinery, spare parts, tools, fixtures, and even moulds to improve your operations. These duties can either be borne by you or passed down to your customers.

The Government of India’s Export Promotion Capital Goods (EPCG) Scheme encourages the import of export promotion capital goods by allowing eligible exporters to import them at a reduced customs duty rate. The aim is to encourage exporting and thereby improve India’s manufacturing abilities and competitiveness.

The EPCG Scheme allows the importation of capital goods and machinery for the production and sale of export goods, which gives an edge to Indian manufacturers.

Indian manufacturers, merchants, and service providers exempted from customs duty on imports under the EPCG scheme will be required to meet certain export obligations if they want to enjoy the benefits of this arrangement.

In brief, the Export Promotion Capital Goods (EPCG) scheme is a program by the government through the Directorate General of Foreign Trade of India (DGFT) to make the customs duties of capital goods used for production, pre-production, and post-production zero.

How to apply for an EPCG license

  • Register with the licensing authority Director General of Foreign Trade (DGFT) or log into your account
  • Select Services -> Online E-com Application
  • Select EPCG
  • Fill in the relevant information and upload the supporting documents
  • Submit your application

Once approved, the DGFT will issue your EPCG license in 3 days

The EPCG scheme differs from the excise duty exemption schemes which promote exports and the manufacturing industry, which are the ones exempted from duties.

In contrast to the Advance License/Advance Authorisation Scheme and the Duty-Free Import Authorisation (DFIA) Scheme, the EPCG enables the import of equipment but not inputs to production like fuel, oil, energy, or catalysts.

Documents required for EPCG license

As part of applying for this license with the DGFT, you will have to fill out the ANF 5B form and attach the following certified documents.

  • Import Export Code (IEC) – A 10-digit alphanumeric code provided by the DGFT. The IEC serves as a key business identification number. It is required for all cross-border trading related to India.
  • Registration/certificate to prove you’re a manufacturer – If you’re a manufacturer applying for the EPCG license, you can provide your MSME/SSI registration, an Industrial Entrepreneurs Memorandum (IEM) certificate, a Udyog Aadhar Registration or an Industrial License.
  • Registration cum Membership Certificate (RCMC) – This certificate validates that you’re a registered exporter from India.
  • DGFT Digital signature – refers to a cryptographically secure key issued by the DGFT.
  • Pan Card – Your tax identity card with a unique 10-digit alphanumeric number issued by the Income Tax Department.
  • GST Registration Certificate – If you’ve registered your business for GST, this certificate can be submitted as additional proof of your business’s existence.
  • Proforma Invoice – A Proforma invoice or purchase order for the capital goods you wish to import.
  • Brochure – A brochure regarding the capital goods you wish to import as a supporting document.
  • Self-Certified Copy + Original of Certificate of Chartered Accountant – This Chartered Accountant (CA) certificate will sign off and confirm your specific and average export obligations obligation based on the average from the last three financial years.
  • Self-Certified Copy + Original of Certificate of Chartered Engineer – This is to confirm that whatever machine you buy does what you say it does. This will need confirmation by an independent chartered engineer, who will provide the CE certificate.

Positive effects of the EPCG Scheme for your company.

Among the benefits that you can derive from the EPCG scheme for your business are the following:-

  • Cost-efficiency – On the other hand, if you’re already investing in the upgrade of equipment with the imported goods, you will save on customs duties, GST, and cess just by maintaining your export levels.
  • Better productivity – The scheme has a wide range of capital goods definitions and therefore you can look for new technologies and machinery that can make your business more efficient, giving you an upper hand in the global market.
  • Attracts investment – The two couplings, push for greener technology, and exemptions under the scheme make it an opportunity for you to grow your business by improving your ESG.
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