EPCG License

EPCG License: Import Capital Goods at 0% Duty with Arrow’s Expert Guidance

• What does an EPCG license mean?
  India's Foreign Trade Policy (FTP) includes the Export Promotion Capital Goods (EPCG) plan, which is a trade incentive program. Its main goal is to make it easier to bring in capital goods so that the country can improve its ability to compete in manufacturing and export. The plan lets businesses bring in capital items without paying any customs duties, but they have to meet a certain export obligation within a certain amount of time.
• Advantages of the EPCG License

  The EPCG plan has a number of important financial and operational benefits:

  • Zero Customs Duty: The biggest benefit is that you don't have to pay customs duty on qualified imported capital goods, which saves you a lot of money up front.
  • Better ROI: The plan increases the return on investment for projects that upgrade technology or expand capacity by lowering the original capital outlay.
  • Flexible Export Obligation Period: Businesses usually have six years to meet their export obligation. This gives them plenty of time to increase production and find markets for their goods.
  • Increased Productivity: Companies can boost their productivity, quality, and overall competitiveness by getting access to modern capital goods without having to pay a lot of taxes.
• Who Can Apply?

  A lot of enterprises that export goods can use the EPCG scheme. Entities that qualify are:

  • Exporters of manufacturers (with or without a supporting manufacturer).
  • Merchant exporters that work with a manufacturer that helps them.
  • Service providers, like those in the tourist, hospitality, healthcare, and logistics industries.

  All applicants must have a valid Import Export Code (IEC) and a Registration-cum-Membership Certificate (RCMC) from the export promotion council that is in charge of their area.

• What kinds of capital goods may you bring in?

  The plan lets people bring in different types of capital assets that are needed to make things or provide services. This includes:

  • Tools and plants
  • Tools for packaging and testing
  • Software and computer systems
  • Molds, dies, jigs, and tools
  • Cranes and other tools for moving things

  The commodities that are brought in must be employed directly in the pre-production, production, or post-production processes. It is also possible to import used capital items under certain conditions.

• What is an Export Obligation (EO)?

  The export obligation (EO) is the promise an importer makes in exchange for the tariff exemption. It is the most important part of the EPCG program. The amount owed is six times the total tariff that was not paid on the imported capital goods.

  You have six years from the day the license is awarded to meet this export goal. You can meet the EO by sending goods to other countries, providing services to clients in other countries, or doing certain domestic operations that are considered "deemed exports."

• Arrow's EPCG License Help

  TArrow offers full advising and management services for the whole life cycle of an EPCG license. Here are some of the things we do:

  • Eligibility Assessment and Strategic Advisory: Checking to see if a company is a good fit for the program and giving them advice on how to carry it out.
  • Application Management: Getting the EPCG application (ANF 5A) ready and filed, and working with the Directorate General of Foreign Trade (DGFT) office.
  • After you get your license, we'll help you track your EO, fill out the paperwork for the Export Obligation Discharge Certificate (EODC), and redeem your license.
  • Compliance and Amendment Services: Making sure that licensing changes, clubbing, and revalidation happen when they need to.
  • Customs Clearance Coordination: Making sure that shipments brought into the country under the EPCG license go through customs without any problems.
• Documents Needed for EPCG Application

  The EPCG application process needs a full and correct collection of documentation. The main checklist has:

  • Certificate of Import Export Code (IEC)
  • Certificate of Registration and Membership (RCMC)
  • Information about your PAN Card and GST registration
  • A pro forma invoice from the foreign supplier of the capital goods
  • A certificate from a Chartered Engineer that explains how the capital goods will be used
  • Information on prior export performance, if it applies
  • The company's financial statements that have been checked by an outside party
• Things You Shouldn't Do That We Can Help You Avoid

  It's important to manage the EPCG license correctly to avoid possible fines and other problems. Some common problems are:

  • Failure to Fulfill Export Obligation: If you don't fulfill your export obligation, you could lose the whole duty amount saved, plus any interest that applies.
  • Importing Goods That Aren't Allowed: Using the license to bring in things that aren't capital goods or aren't allowed under the program can lead to problems with customs.
  • Not keeping good records: Not keeping track of how well exports are doing and not filling out the right paperwork might make the license redemption and EODC procedure harder.
  • Delays in Redemption: Not closing the license on time after meeting the requirement can cause problems with compliance.
• Frequently Asked Questions

  Can I use the EPCG license to bring in spare parts or other items?

  The license allows the import of important spare components, but this is usually limited to 10% of the value of the main capital good. It can't be utilized for everyday items that aren't capital goods.

  What if I can't meet the EO?

  If the export obligation is not met within the time frame set, the licensee must pay back the customs duty that was originally exempted, plus any interest that has built up. In some situations, the DGFT may look at petitions for an extension or forgiveness of a slight deficiency.

  How many EPCG licenses can I get?

  A business can have as many EPCG licenses as it wants. An applicant can apply for more than one license as long as they meet the requirements for each one and keep track of their separate export obligations.

• Start saving money on your capital equipment right now.

  The EPCG initiative gives businesses a big chance to lower their capital costs and become more competitive on a worldwide scale. Arrow's professionals make sure that everything is done right and that everything is managed well throughout the process. This lets your organization get the most out of it with the least amount of danger.