EPCG Scheme: Zero-Duty Capital Goods for Indian Exporters

The Export Promotion Capital Goods (EPCG) Scheme is administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry. It is built for businesses that sell into overseas markets and want to upgrade their plant without carrying the full upfront tax burden of new equipment. Approved applicants bring in capital goods with customs duty completely waived, and the IGST and Compensation Cess that would normally apply on physical exports are exempted as well.

The scheme is not limited to purchases made abroad. An exporter can also procure the same category of capital goods from Indian suppliers and still draw the benefit, which keeps domestic manufacturers and their supply chains in the picture.

What counts as capital goods is defined generously: machinery, computer systems and the software that runs them, plus the supporting items a production line needs — spares, moulds, dies, jigs, fixtures, tools, refractories and catalysts. The coverage is meant to reflect the reality that competitiveness in export markets depends on the whole equipment ecosystem, not just the headline machine.

In return for the concession, the beneficiary accepts an export obligation. That obligation is what ties the scheme to national trade goals: the duty saved has to come back as overseas sales. The scheme is designed for manufacturer exporters, merchant exporters working through supporting manufacturers, and service providers, so it is not restricted to any single kind of export business.

• Customs duty, IGST and Compensation Cess waived on capital goods imports
• Cover applies to pre-production, production and post-production activity
• Export obligation of 6x the duty, tax and cess saved, met over 6 years
• Obligation cut to 75% for Green Technology Products
• Obligation cut to 25% for units in the North-Eastern states and Jammu and Kashmir
• Open on a rolling basis, with no fixed deadline

Applicants must hold an 'Active' Importer Exporter Code (IEC). The IEC is the anchor of the application — without it, nothing else can proceed.

The person filing must be able to log in to the DGFT Customer Portal with E-Sign and DSC enabled, and must be authorised to draft and submit applications on behalf of that IEC.

GSTN details linked to the branches covered by the IEC must be updated before the application is submitted.

On the business side, the scheme is open to:

• Manufacturer exporters, whether or not they use supporting manufacturers
• Merchant exporters tied to supporting manufacturers
• Service providers

Because an active IEC and current GSTN records are required, EPCG suits registered, operational export businesses. It is not aimed at pre-incorporation ventures or idea-stage startups.

EPCG Scheme: Zero-Duty Capital Goods for Indian Exporters is open to startups at any stage. It is open to startups registered anywhere in India.

EPCG Scheme: Zero-Duty Capital Goods for Indian Exporters accepts applications on a rolling basis — there is no fixed cut-off date, so eligible startups can apply at any time. Because rolling programmes can pause without notice, confirm the window is still open on the official site before you start.

The core benefit is a duty waiver on capital goods, applied across customs duty, IGST and Compensation Cess. For physical exports, all three are exempted, which removes a large block of upfront capital expenditure for a business setting up or expanding export-oriented capacity.

The concession applies to goods used in pre-production, production and post-production activity, so the equipment does not have to sit on the main manufacturing line to qualify.

The value of the benefit is not a fixed sum — it varies according to the duties and taxes saved on the specific capital goods involved.

Two categories of exporters can have their export obligation reduced:

• Exporters of Green Technology Products — obligation reduced to 75% of the export obligation
• Units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu and Kashmir — obligation reduced to 25% of the export obligation

Applications are also accepted for capital goods procured from indigenous sources, not just imported ones.

EPCG Scheme: Zero-Duty Capital Goods for Indian Exporters is offered by Ministry of Commerce and Industry, a government body. As a government-backed subsidy, it is publicly funded and open to eligible startups across India.

Every application is examined by the Directorate General of Foreign Trade (DGFT), which checks it against the Foreign Trade Policy (FTP) and the specific conditions attached to the scheme.

The verification covers the applicant's IEC status, the GSTN details on record, and the nature of the capital goods proposed for import or procurement. Approval follows once the eligibility criteria are satisfied and the applicant accepts the stated export obligation.

Where the goods involved are restricted for import or export, the application cannot be cleared at this level — it requires approval from the Exim Facilitation Committee (EFC) at DGFT Headquarters.

Before you apply to EPCG Scheme: Zero-Duty Capital Goods for Indian Exporters, keep the following documents ready:

• A pitch deck or short business plan describing the problem, product and traction
• Company registration documents and PAN
• Founder identification (PAN / Aadhaar) and brief profiles
• Recent financial statements or projections
• Product details — a demo, prototype or working link if available

Exact requirements are confirmed on the official application portal — treat this as a preparation checklist.