CLE-HO/POL/CIRCULAR/2020
March 2, 2020

Members of the Council,

Sub : Relief in Average Export Obligation under EPCG in terms of Para 5.19 of Hand Book of Procedures of Foreign Trade Policy 2015-20 – reg.

Dear Member,

As members are aware, the Export Promotion Capital Goods Scheme (EPCG) allows import of capital goods including spares for pre production, production and post production at zero duty subject to an export obligation of six times of duty saved on capital goods imported under the scheme, to be fulfilled in six years from authorisation issue date.

Regulations on fulfillment of Export Obligations under EPCG

As per para 5.04 (b) of Foreign Trade Policy 2015-20, the Export Obligation (EO) under the EPCG scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period.

–         Also, para 5.14 (a) of Handbook of Procedures, states the following condition with regard to fulfillment of export obligations

 The Authorisation holder under the EPCG scheme shall, while maintaining the average export obligation, fulfill the specific export obligation over the prescribed block period in the following proportions:

Period from the date of issue of Authorisation	Minimum export obligation to be fulfilled
Block of 1st to 4th year	50%
Block of 5th and 6th year	Balance EO

 
Relaxation in Maintenance of Annual Average Export Obligation under EPCG

The DGFT has issued a Policy Circular No. 31/2015-20 dated 26^th February 2020 stating that Para 5.19 of Hand Book of Procedures of Foreign Trade Policy 2015-20 envisages that to provide relief to exporters of those sectors where total export in the sector/product group has declined by more than 5% as compared to the previous year, the average export obligation for the year may be reduced to proportionate to reduction in exports of that particular sector/ product group during the relevant year as against the preceding year. This implies that the sector/product group that witnessed such decline in 2018-19 as compared to 2017-18 would be entitled for such relief.

As per the aforesaid Policy Circular No. 31/2015-20, the following categories of finished leather are also entitled for the aforesaid relief in annual average export obligation under EPCG during 2018-19

HS Code	Product	Export2017-18 (Rs.cr)	Export2018-19 (Rs.cr)	% change
4114	Chamois Leather/Patent Leather/ Patent Laminated Leather/ Metallised Leather	363434604	275061948	– 24.3%
4107	Leather further prepared after tanning or crusting, including parchment dressed leather of bovine (including buffalo)	36184134662	30612525049	– 15.40%
4113	Leather further prepared after tanning or crusting, including parchment dressed leather of other animals	14292663204	12865493605	– 10%

Members may kindly note the above.

Thanks & regards,

R.Selvam
Executive Director

Circular