EXPORT PROMOTION CAPITAL GOODS SCHEME (Syllabus: GS Paper 3 - Economy)

Context: Recently, the Directorate General of Foreign Trade (DGFT) has announced significant enhancements to the Export Promotion Capital Goods (EPCG) Scheme aimed at simplifying processes, reducing transaction costs and promoting automation to benefit exporters'. 

Export Promotion Capital Goods Scheme:

• About: It is a trade promotion scheme implemented by the Indian government.
• Aim: To encourage the production of goods for export by providing import duty concessions on capital goods.
• Administered and governed by: The EPCG scheme is administered by the Directorate General of Foreign Trade (DGFT) and is governed by the Foreign Trade Policy of India.
• Promote export: It allows the duty-free import of capital goods for the purpose of export production in India.
• Capital Goods allowed under EPCG Scheme: The capital goods allowed under Export Promotion Capital Goods Scheme shall include spares (including reconditioned/ refurbished), fixtures, jigs, tool, moulds and dies. Further, second-hand capital goods may also be imported without any restriction on age under the EPCG Scheme.
• Benefit from EPCG Scheme: EPCG is intended for promoting exports and the Indian Government with the help of this scheme offers incentives and financial support to the exporters.
• Features:

oAllows import of capital goods for pre-production, production, and post-production at zero customs duty.

oCovers manufacturer exporters (with or without supporting manufacturer(s)), merchant exporters tied to supporting manufacturer(s), and service providers.

oSecond-hand goods of any nature are not permitted under the EPCG scheme.