If you’re planning to enter the export market from India—or already there and aiming to boost your business—it’s essential to understand the government support systems available. Two standout options are the EPCG Scheme and the Advance Authorisation Scheme. These programs are designed to reduce production costs and help Indian exporters stay competitive in international markets.
Let’s explore both schemes in detail.
Overview of the EPCG Scheme (Export Promotion Capital Goods Scheme)
The EPCG Scheme allows businesses to import capital goods—like machines, tools, or equipment—without paying customs duty. This exemption significantly reduces the cost of manufacturing setup or expansion.
However, there is a condition: the business must export goods worth six times the value of the duty saved, within six years. This is referred to as the export obligation.
Example:
If you save ₹10 lakhs in customs duty through this scheme, you are required to export products worth ₹60 lakhs within six years.
This scheme is open not only to manufacturers of goods but also to service providers—like hotels, hospitals, and logistics companies involved in export activities.
Understanding the Advance Authorisation Scheme and Its Applications
While the EPCG Scheme deals with capital goods, the Advance Authorisation Scheme focuses on raw materials needed for the production of export goods.
This scheme enables businesses to import inputs—such as chemicals, metals, fabrics, or electronic parts—without paying customs duty, provided these materials are used to make export-bound goods.
Like EPCG, this scheme also requires you to fulfill an export obligation, ensuring that the benefit is used exclusively for export purposes.
It is particularly beneficial for sectors like:
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Textiles and apparel
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Pharmaceuticals
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Chemical and engineering industries
Key Advantages of These Government Schemes for Exporters
Why are these schemes worth your attention? Here are the major benefits:
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Significant cost savings: No customs duty on imported inputs or machinery.
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Improved competitiveness: Lower costs make Indian products more attractive in global markets.
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Increased export margins: Better profit potential without raising prices.
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Streamlined application process: Most procedures are now handled online via the DGFT portal.
These advantages can help both small businesses and large enterprises expand their global footprint.
Important Considerations and Compliance Requirements
While these schemes offer many benefits, it’s crucial to keep the following points in mind:
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Export Obligation: You must meet the required export targets within the specified timeframe.
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Proper Documentation: Keep accurate records of all imports and exports for verification.
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Timely Compliance: Missing deadlines can result in penalties or the need to repay the waived duties with interest.
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Restrictions on Domestic Sale: Goods produced using these schemes are meant strictly for export unless you pay back the duty.
Being compliant ensures you can continue benefiting from the schemes without any interruptions or legal issues.
Application Process Through the DGFT Portal
Both the EPCG Scheme and the Advance Authorisation Scheme can be applied for through the official DGFT (Directorate General of Foreign Trade) website.
You’ll need:
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Basic company information
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Details of the machinery or raw materials
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Export plan and product information
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Supporting documents for eligibility
Although the process is mostly online, it may be wise to consult a trade advisor or professional consultant to ensure accuracy and full compliance—especially if you’re applying for the first time.
Conclusion: Leveraging Government Support for Export Growth
The EPCG Scheme and Advance Authorisation Scheme are powerful tools for Indian exporters. By reducing the upfront cost of production—whether it’s machinery or raw materials—they empower businesses to grow more efficiently in global markets.
With the right planning, timely compliance, and a focus on exports, these schemes can help you lower costs, improve profit margins, and stay ahead of international competition.
Whether you are a small factory owner or a large-scale exporter, these schemes are worth exploring for long-term growth and sustainability in the export business.
