The Export Promotion Capital Goods scheme, in Chapter 5 of the Foreign Trade Policy 2023. Its objective, under Para 5.00, is to make it easier to import capital equipment so that firms can produce better goods and services and compete in manufacturing.

Para 5.01 allows capital goods, other than those in the negative list at Appendix 5F, to be imported at zero customs duty for pre-production, production and post-production. Goods used for physical exports are also exempt from IGST and compensation cess. Covered items include CKD and SKD capital goods, related computer systems and software, spares, moulds, dies, jigs, fixtures, tools, refractories and catalysts.

The specific export obligation is six times the duty, taxes and cess saved, to be met within six years of the authorisation date (Paras 5.01 and 5.04). You must also meet an Average Export Obligation each financial year until the obligation is completed. It is based on the average exports of the preceding three licensing years.

Para 5.01(d) says imports must be made within 24 months of issue of the authorisation, and it says revalidation is not permitted. Plan your purchase and shipment dates around that.

Manufacturer exporters (with or without supporting manufacturers), merchant exporters tied to supporting manufacturers, and service providers (Para 5.02). Certain Common Service Providers in a Town of Export Excellence or a PM MITRA park can also qualify, with conditions including a bank guarantee equal to the duty saved.

Yes. Para 5.07 lets holders buy capital goods from domestic sources. The specific export obligation is 25 per cent lower for indigenous sourcing, and domestic suppliers can receive deemed export benefits (Paras 5.04, 5.07 and 5.08).

• Green Technology Products (Para 5.10): the specific export obligation is 75 per cent of the standard obligation.
• North East and J&K/Ladakh units (Para 5.11): 25 per cent of the standard obligation.
• Early fulfilment (Para 5.09): if 75 per cent or more of the specific obligation and all of the average obligation are met in half the period or less, the remaining obligation is condoned.

Para 5.12(a) exempts listed sectors, such as agriculture, handicrafts, handlooms, KVIC industries, poultry and jute, from the Average Export Obligation. For these sectors, goods other than tools cannot be transferred for five years from import, even after the obligation is met (Para 5.12(c)).

The Actual User condition applies until the Export Obligation Discharge Certificate is issued (Para 5.03). Restricted imports and exports need approval from the Export Facilitation Committee (Paras 5.01(f) and (g)).

Para 5.05 gives relief where an approved resolution plan under the Insolvency and Bankruptcy Code applies.

Yes. Tell us the machine, its value and your export plan. We will tell you the duty saved, the export promise it brings, and the dates to keep. We are just a call and a message away.