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EPCG Scheme: Conditions and Requirements

India is one of the fastest-growing countries in the world and this means that India has enormous potential for trade. In order to encourage trade, the government launched a new scheme - Export Promotion Capital Goods scheme - which allows import export businesses like yours to import capital goods without any high custom duty charge.

What Are Capital Goods?

Capital goods are products that are used in the production of other products. They are durable and have a longer lifespan than other products. Capital goods can also be used for research and development. The government has introduced the EPCG scheme to help companies export their capital goods.

How Do We Classify the Various Classification of Capital Goods

The Indian government has introduced the Export Promotion Capital Goods Scheme  to promote Exports of Capital Goods. The scheme covers a wide range of products, including aircraft, automobiles, telecommunications equipment, pharmaceuticals and defense equipment.Under the EPCG scheme, eligible exporters can receive up to 100% credit assistance for the purchase of capital goods. The assistance can be provided in the form of loans, insurance or grants. The total budget for the scheme is ₹ 50,000 crore over seven years.The eligibility criteria under the scheme are broad and include products that are likely to generate export revenue. Products that are not likely to generate export revenue, such as infrastructure projects, are not eligible for assistance under the scheme.The scheme  is an important part of India’s strategy to support exports of high-value capital goods. The scheme will help reduce the cost of investment in these products and make them more competitive on global markets.

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What Is the Export Promotion Capital Goods Scheme?

The Export Promotion Capital Goods Scheme (EPCG Scheme) was introduced by the Indian government to promote exports of capital goods worth ₹ 1,000 crore or more. The scheme provides a benefits package including export credit and insurance, concessional duty and tax reliefs. It is expected to support exports of capital goods worth ₹ 50,000 crore over the next five years.

How Does It Work?

The Indian government has introduced the Export Promotion Capital Goods Scheme . This scheme will provide Funding for the purchase of capital goods used in exports. The aim of the scheme is to promote exports and create jobs in the country. The scheme  is open to projects that are registered with the Export Promotion Council of India. Projects that qualify for funding must have a set minimum investment and a duration of two years.Funding can be received in two ways: through a loan from a commercial financial institution or through a grant from the government. There are several benefits to registering for the scheme. First, registered projects are eligible for government grants and loans that are not available to other businesses. Second, registered projects can receive tax breaks and promotional assistance from the government. Third, registered projects can access export credit guarantees from international financial institutions. In order to apply for funding under the scheme , project managers must submit an application form and detailed project proposal. The application form can be found online. The proposal should include information on the project goals, timeline, financials, and business plan. 

Conditions and Requirements of the EPCG Scheme

This scheme is designed to promote exports of capital goods, including machinery and equipment. To be eligible for the scheme, exporters must meet certain conditions, including having a valid export license and a registered company with minimum paid-up equity of ₹ 100 crores. In addition, exporters must certify that their exported capital goods will not be used for military purposes. The scheme offers a grant of up to ₹ 50 crore per project, contingent upon the successful completion of the exporting enterprise. The grant can be used to finance both domestic and foreign investment in the project. The scheme is open to all types of capital goods, including manufactured products and services.

How Does the EPCG Scheme Work?

Under the Export Promotion Capital Goods Scheme, the government offers tax holidays and other incentives to companies who invest in high-technology capital goods, such as machinery and equipment. This helps boost India’s export sector and create job opportunities in sectors such as manufacturing. 

The scheme is open to companies that have an annual export turnover of ₹ 100 crore or more. Eligible companies can apply for a refund of 80% of the investment amount, plus a 15% interest subsidy. The scheme is also available to companies that have newly established plants in India. To be eligible, capital goods must be new and not used in the company’s existing production line.

Key Points of EPCG Scheme:

This scheme will provide funding worth up to ₹500 crore to companies that wish to export capital goods. Import duties on capital goods exported under this scheme will be waived for a period of five years. The scheme will be open to companies registered with the Department of Industrial Policy and Promotion (DIPP).Contact Vakilsearch today to know more about this scheme.

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