EPCG Scheme 2026: Zero Duty Machinery Guide
Imagine being able to import a ₹2 crore CNC machine for your factory with no customs charge.The EPCG schemes allows that. In 2026, it got even more valuable: DGFT automatically extended export obligation deadlines, reduced Average EO for struggling sectors, and launched a special drive to clear pending EODC (Export Obligation Discharge Certificate) cases. If you manufacture goods for export, this guide shows you exactly how much you can save
How the EPCG Scheme Works — Simple Visual
EPCG stands for Export Promotion Capital Goods. It lets you import machinery, equipment, and capital goods at zero customs duty — in exchange for a commitment to export a certain value of goods over a specified period.
⚙️ EPCG Scheme — How It Works in 4 Steps
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📋
Apply ANF-5A
File on DGFT portal. Get EPCG licence with duty saved amount noted.
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⚙️
Import at Zero Duty
Pay zero BCD, zero IGST, zero Comp Cess on capital goods.
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📦
Fulfil Export Obligation
Export 6× duty saved in 6 years. Annual EO reports by June 30.
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✅
Get EODC & Close
Apply for EODC. Scheme formally closed. No further liability.
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0%
Customs Duty on Import
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6×
Export Obligation of duty saved
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6 Yrs
Time to Fulfil EO
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Real ₹ Saving — Garment Exporter, Tirupur
💰 EPCG Real Saving — Computerised Embroidery Machines, Tirupur
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✅ Export Obligation
6 × ₹15,00,000 (BCD) = ₹90 lakhs in 6 years
For a Tirupur exporter doing ₹50L/year — met in under 2 years. Net benefit: ₹55.47L saved upfront. |
⚠️ If You Fail EO
Pay back ₹55.47L + 15% interest p.a.
6-year failure = ~₹1.05 crore total liability. EO tracking is non-negotiable. |
💡 Domestic Sourcing Trick: Buy capital goods from an Indian manufacturer instead of importing → DGFT gives you 25% reduction in specific export obligation. The domestic supplier gets Deemed Export benefits. Best of both worlds.
Latest EPCG 2026 Updates
📅 EPCG 2026 — Key Notifications
⚠️ EO extended to August 31, 2026: Do NOT wait till August. Submit Shipping Bills and EO reports regularly. Last-minute rushes cause documentation errors that delay discharge for months.
Two Types of Export Obligation — Most Exporters Confuse These
📊 Specific EO vs Average EO
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🎯 Specific EO (SEO)
Linked directly to duty saved on your specific EPCG import. Primary obligation.
SEO = 6 × Duty Saved on BCD
Must be fulfilled within 6 years. Tracked through Shipping Bills on DGFT portal. Annual reports due June 30.
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📈 Average EO (AEO)
Ensures your existing export performance does not decline after getting machinery.
AEO = Avg exports of preceding 3 years
Must maintain this level every year. Sectors with >5% export decline in 2024–25 get AEO reduced under Policy Circular 10/2025-26.
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⚠️ The Trap: An exporter can fulfil 100% Specific EO in Year 3 and still get a penalty because Average EO for Year 1 and Year 2 was not maintained. Always track BOTH every year.
💡 Optimal Strategy: Use EPCG for machinery + RoDTEP on every shipment + Duty Drawback on inputs — all simultaneously. 100% legal under FTP 2023. A qualified CHA can map this for your specific HS codes.
7 Costly Mistakes That Trigger Penalties
🎯 Bottom Line: The EPCG scheme is one of the most powerful financial tools for Indian manufacturers who export. A ₹2 crore machinery import saves over ₹55 lakhs in duty instantly. But miss your Export Obligation and that saving turns into ₹1+ crore liability with 15% annual interest. The 2026 relief measures are time-sensitive — act on them now.
Share this with every manufacturer exporter you know. The right use of EPCG can be the difference between a competitive business and one struggling with capital costs.