The EPCG Scheme (Export Promotion Capital Goods Scheme) is one of the most important export incentive schemes introduced by the Government of India under the Foreign Trade Policy (FTP). This scheme plays a crucial role in supporting exporters by allowing them to import capital goods at zero or concessional customs duty, subject to fulfilling specific export obligations.

However, many exporters and business owners still have one major question: Who can apply for the EPCG Scheme?
This detailed guide will clearly explain eligibility criteria, types of applicants, conditions, exclusions, and practical examples, so you can easily understand whether your business qualifies for the EPCG Scheme or not.

What Is the EPCG Scheme?

Before understanding eligibility, it is important to briefly understand what the EPCG Scheme is.

The EPCG Scheme allows manufacturers and service providers to import capital goods such as machinery, equipment, or tools required for producing export goods or services without paying customs duty or at a reduced duty rate. In return, the importer must fulfill an export obligation (EO) within a specified period.

The main objective of the EPCG Scheme is to:

• Promote exports

• Improve product quality

• Encourage modernization of technology

• Enhance India’s competitiveness in the global market

Who Can Apply for the EPCG Scheme?

The EPCG Scheme is open to a wide range of exporters and service providers. Let’s break this down clearly.

1. Manufacturer Exporters

Manufacturer exporters are one of the primary beneficiaries of the EPCG Scheme.

If you are:

• Manufacturing goods in India

• Using capital goods such as machinery, plant, or equipment

• Exporting the finished products

Then you are eligible to apply under the EPCG Scheme.

Manufacturer exporters can import capital goods either:

• Directly, or

• Through a supporting manufacturer

📌 Example:
A textile manufacturing unit importing weaving machines for exporting garments can apply under the EPCG Scheme.

2. Merchant Exporters (With Supporting Manufacturer)

Merchant exporters can also apply for the EPCG Scheme, but with one important condition.

A merchant exporter must:

• Tie up with a supporting manufacturer

• Ensure that the capital goods are installed at the supporting manufacturer’s premises

The export obligation must be fulfilled jointly by:

• Merchant exporter, and

• Supporting manufacturer

📌 Example:
A merchant exporter exporting engineering goods can import machinery under EPCG and install it at the factory of the supporting manufacturer.

3. Service Providers

Service providers are also eligible under the EPCG Scheme, provided they earn foreign exchange.

Eligible service providers include:

• Hotels

• Travel and tourism companies

• Hospitals providing medical tourism

• IT and IT-enabled services

• Logistics and transport services

• Educational and training institutes (exporting services)

They must be:

• Listed under the Foreign Trade Policy

• Earning foreign exchange through services

📌 Example:
A hotel importing kitchen or laundry equipment for serving foreign tourists can apply under the EPCG Scheme.

4. Common Service Providers (CSP)

Common Service Providers (CSPs) are entities that provide services to a group of exporters.

They are eligible if:

• The capital goods are used for supporting exports

• Multiple exporters benefit from the services

📌 Example:
A testing laboratory used by multiple exporters for quality certification can apply under EPCG.

5. Manufacturer Exporters With or Without Export History

One of the best features of the EPCG Scheme is that past export performance is NOT mandatory.

• New exporters can apply

• Existing exporters can apply

• No minimum turnover is required

This makes the EPCG Scheme extremely useful for startups and first-time exporters.

Eligibility Conditions Under the EPCG Scheme

To apply for the EPCG Scheme, applicants must meet the following conditions:

1. Import of Capital Goods Only

Only capital goods are allowed under the EPCG Scheme.

Capital goods include:

• Machinery

• Plant and equipment

• Tools, jigs, and fixtures

• Spares (up to permitted limits)

• Computer systems and software (in specific cases)

❌ Raw materials and consumables are not allowed.

2. Actual User Condition

Capital goods imported under the EPCG Scheme must be:

• Used by the applicant or supporting manufacturer

• Not sold, leased, or transferred until export obligation is fulfilled

This ensures that the benefit is used only for export promotion.

3. Export Obligation (EO) Requirement

Every EPCG authorization comes with an export obligation, which is usually:

• 6 times the duty saved (unless otherwise specified)

The EO must be fulfilled within:

• 6 years from the date of authorization

Failure to meet EO may result in:

• Payment of duty saved

• Interest and penalties

4. Installation of Capital Goods

Capital goods must be:

• Installed at the declared premises

• Installation certificate submitted to DGFT or customs authorities

This is a mandatory compliance requirement.

Who Is NOT Eligible for the EPCG Scheme?

Not everyone can apply under the EPCG Scheme. The following are not eligible:

• Traders with no manufacturing or service export activity

• Importers using capital goods for domestic sales only

• Businesses involved in prohibited or restricted exports

• Applicants failing to meet export obligation conditions

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Documents Required for EPCG Scheme Eligibility

To apply for the EPCG Scheme, applicants generally need:

• Import Export Code (IEC)

• GST registration

• PAN card

• Chartered Engineer certificate (for capital goods)

• Export performance details (if available)

• Installation certificate

• Bank certificate and financial documents

Benefits of EPCG Scheme for Eligible Applicants

If you are eligible, the EPCG Scheme offers several advantages:

• Zero or concessional customs duty

• Reduced cost of capital investment

• Access to modern technology

• Improved export competitiveness

• Support for business expansion

Practical Examples of EPCG Scheme Eligibility

Example 1: Manufacturing Unit

A pharmaceutical company imports advanced production machinery and exports medicines. Eligible under EPCG Scheme.

Example 2: Service Exporter

A hospital importing MRI machines for foreign patients. Eligible under EPCG Scheme.

Example 3: Merchant Exporter

A merchant exporter importing machinery for a supporting manufacturer exporting auto parts. Eligible with conditions.

Common Mistakes to Avoid While Applying

• Importing non-capital goods

• Missing installation deadlines

• Poor export obligation planning

• Incorrect declaration of premises

• Ignoring compliance timelines

Avoiding these mistakes ensures smooth approval and benefits under the EPCG Scheme.

Conclusion

The EPCG Scheme is a powerful incentive designed to help Indian exporters and service providers grow globally. Whether you are a manufacturer exporter, merchant exporter, or service provider, understanding who can apply for the EPCG Scheme is the first step toward availing its benefits.

If your business involves exports and requires capital goods, the EPCG Scheme can significantly reduce costs and improve competitiveness—provided you meet the eligibility criteria and fulfill export obligations responsibly.

FAQs –

1. Can a new exporter apply for the EPCG Scheme?

Yes, new exporters with no previous export history can apply under the EPCG Scheme.

2. Are service providers eligible for the EPCG Scheme?

Yes, service providers earning foreign exchange and listed under the Foreign Trade Policy are eligible.

3. What happens if export obligation is not fulfilled?

If export obligation is not fulfilled, the applicant must pay the duty saved along with interest and penalties.