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5 Common Mistakes to Avoid When Applying for the EPCG Scheme

Avoid delays and rejection in the EPCG scheme application. Learn 5 common mistakes exporters make and how to prevent them for a smooth approval process.<br>

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5 Common Mistakes to Avoid When Applying for the EPCG Scheme

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  1. 5 Common Mistakes to Avoid When Applying for the EPCG Scheme Visit Our Website www.dgftguru.com

  2. 5 Common Mistakes to Avoid When Applying for the EPCG Scheme The Export Promotion Capital Goods (EPCG) Scheme is a vital initiative by the Government of India to promote exports by allowing duty-free imports of capital goods. However, many exporters make mistakes when applying for the scheme, leading to delays, financial losses, or even rejection of their applications. Understanding these common mistakes can help exporters streamline the application process and fully utilize the benefits of the EPCG scheme. dgftguru.com

  3. Incomplete Documentation One of the most frequent mistakes applicants make is submitting incomplete documentation. The Directorate General of Foreign Trade (DGFT) has stringent requirements regarding the submission of essential documents, such as: Import Export Code (IEC) GST registration certificate Chartered Engineer Certificate (CEC) Bank guarantee or LUT (Letter of Undertaking) Manufacturing license (if applicable) Failing to provide all required documents or submitting incorrect information can result in delays or rejection. Tip: Carefully review the DGFT’s latest guidelines and use a checklist to ensure all documents are in order before submission.

  4. Incorrect Selection of Capital Goods The EPCG scheme is designed for capital goods used in manufacturing export products. A common error is selecting ineligible goods or failing to justify how they contribute to export production. The capital goods must meet the following criteria: Directly related to the export process Used for producing export-oriented goods Not intended for resale in the domestic market Before applying, consult a Chartered Engineer to validate the equipment’s eligibility under the EPCG scheme. dgftguru.com

  5. Non-compliance with Export Obligation Applicants under the EPCG scheme must fulfil an export obligation (EO) within six years. This means exporting products worth at least six times the value of the duty saved on imported capital goods. Common mistakes include: Miscalculating the EO based on incorrect duty rates Missing export deadlines Failing to maintain accurate export records Non-compliance with the export obligation can lead to penalties, fines, and even cancellation of EPCG benefits. Tip: Maintain clear records of exports and monitor progress regularly to ensure compliance. dgftguru.com

  6. Lack of Proper Bank Guarantee For companies that do not meet the status holder criteria, providing a bank guarantee is mandatory. Many applicants either fail to provide this guarantee or submit an insufficient amount. The key requirements include: The bank guarantee should cover the customs duty saved amount It must be valid for the duration of the export obligation period The bank issuing the guarantee must be recognized by the DGFT Exporters should consult their banks before applying to avoid last- minute issues that may hinder their EPCG application. dgftguru.com

  7. Failing to Update Licenses and Compliance Records After receiving an EPCG license, exporters must ensure they regularly update their records with the DGFT. Many exporters neglect: Filing periodic returns Updating changes in machinery usage Reporting export status on time Failure to update records can lead to unnecessary scrutiny or penalties from DGFT authorities. Tip: Set reminders for all compliance updates and maintain digital records for easy access. dgftguru.com

  8. Conclusion Avoiding these five common mistakes when applying for the EPCG scheme can help exporters maximize benefits and prevent unnecessary hurdles. By ensuring complete documentation, selecting eligible capital goods, meeting export obligations, securing proper bank guarantees, and maintaining compliance records, exporters can leverage the EPCG scheme to enhance business growth. Proper planning and adherence to DGFT regulations will ensure a smooth and hassle-free application process, ultimately leading to increased global competitiveness. By staying informed and prepared, businesses can make the most of the EPCG scheme and achieve long-term export success. dgftguru.com

  9. On Our Website Given Below THANK YOU Visit Our Website www.dgftguru.com

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