Epcg

EPCG Scheme allows import of all capital goods (including CKD/SKD thereof as well as computer software systems and spares, jigs, fixtures, dies and moulds) and can be availed by manufacturer exporters as well as merchant exporters tied to supporting manufacturer(s) and Service Providers at a concessional rate of duty at 0% or 3% as per para 5.1 of FTP09-14.
This is subject to an Export Obligation (EO) equivalent to 6/8 times of duty saved, to be fulfilled over a period of 6/8 years reckoned from the date of issuance of license. For large projects, SSI etc. there are more relaxed norms of EO.
Export obligation: The export obligation needs to be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme. In addition upto 50% of the EO can also be fulfilled by any alternate product of the company or even group company. Deemed Exports like supplies to Power Projects, Projects funded by WB/ADB/JBIC etc, EOUs etc. can also be utilized to fulfill the EO
Indigenous Sourcing: A person holding an EPCG license may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG license holders shall be eligible for refund of Excise Duty paid by him. In addition the indigenous supplier can import his own raw material duty free.