Top 5 Industries Which Can Get the Most Out of EPCG Scheme

The Export Promotion Capital Goods (EPCG) Scheme is a flagship initiative of the Indian government aimed at enhancing the country’s export capabilities. The scheme plays a significant role in modernising production processes and encouraging industries to adopt global standards. 

For sectors that rely heavily on machinery and technological advancements, the EPCG scheme catalyses growth and expansion in international trade.

The EPCG Scheme is a government initiative designed to promote exports by allowing duty-free import of capital goods required for producing goods or services meant for export. These capital goods include machinery, equipment, or tools that enhance manufacturing and production capabilities.

• Zero Customs Duty: Eligible industries can import capital goods without paying customs duty.
• Export Obligation: Beneficiaries must export goods worth six times the value of the duty saved within six years.
• Applicable for a Wide Range of Goods: The scheme covers various equipment, including machinery used for production, packaging, and quality control.
• Encouraging Technology Upgrade: It enables Indian industries to adopt the latest technologies and compete globally.
• Promotes Sustainability: The scheme supports industries aiming for energy efficiency and sustainability by allowing duty-free import of eco-friendly machinery.

• Open to both manufacturers and service providers who export goods or services.
• Export obligations must be fulfilled within the stipulated period.
• Beneficiaries must be registered with the Directorate General of Foreign Trade (DGFT).
• Eligible sectors include agriculture, manufacturing, mining, and services, among others.

The EPCG scheme has proven to be a game-changer for several export-driven industries in India. Among the beneficiaries, five industries have emerged as the frontrunners, utilising the scheme to maximise their export potential and strengthen their position in international markets.

The EPCG scheme for the textile and apparel sector has significantly benefited India’s export growth. It is projected to reach $70 billion by 2025-26 at a CAGR of 12%.

Duty-free imports of advanced machinery, such as automated looms and dyeing units, enable cost-effective production and compliance with global standards. 

With India’s strong raw material base—leading global cotton production (30% share)—and a complete manufacturing value chain, the scheme fosters competitiveness in key markets like the USA, EU, and UAE. 

This modernisation under the EPCG scheme positions Indian textiles for sustained global leadership.

India’s pharmaceutical sector is a cornerstone of global healthcare, with exports surpassing $25 billion in 2022. EPCG scheme for the pharmaceutical industry enables efficient production processes and adherence to international quality benchmarks. 

This ensures that Indian pharmaceutical companies can meet the growing demand for cost-effective medicines in highly regulated markets like the USA and EU. The scheme plays a significant role in enhancing the sector’s global competitiveness and reinforcing India’s position as a trusted supplier of affordable healthcare solutions worldwide.

The automobile and auto components industry under the EPCG scheme imports advanced capital goods like robotics and CNC machines, essential for precision manufacturing and innovation. 

With exports reaching $23 billion in FY 2022-23, the scheme reduces costs and supports the production of globally competitive vehicles and parts. This enables Indian manufacturers to expand in key markets like the USA, Europe, and Africa while modernising operations to meet evolving global standards.

The electronics and IT hardware sector benefits significantly from the EPCG scheme through duty-free imports of advanced manufacturing equipment such as PCB assembly lines and semiconductor tools. 

India, a fast-growing hub for electronics exports, is projected to reach $120 billion by 2026​. By lowering production costs and enabling access to cutting-edge technology, the scheme empowers Indian manufacturers to maintain a competitive edge in global markets like the USA, China, and Southeast Asia.

India’s gems and jewellery industry, contributing over $37 billion to India’s exports in FY 2022-23, extensively uses the EPCG scheme to import precision tools like laser-cutting machines and polishing equipment. 

Duty-free access to such machinery enhances the production of high-quality, export-ready products. With a dominant share in global markets, the scheme ensures cost efficiency and technological advancement, strengthening India’s position as a leading jewellery exporter.

With the numerous benefits of EPCG scheme, it is also important to keep in mind the challenges that come along:

Industries must meet specific export obligations to qualify for the duty benefits under the EPCG scheme. These obligations require companies to achieve export performance targets within a stipulated timeframe, which can be challenging for some sectors, especially those facing market volatility or global economic disruptions.

Although the scheme offers long-term benefits, the upfront cost of procuring capital goods can be substantial. For small and medium enterprises (SMEs), this initial financial burden can be a barrier to fully utilising the EPCG scheme, especially if they lack access to financing options.

The EPCG scheme is subject to various regulatory requirements and procedures that can be complex and time-consuming. Industries must navigate compliance with both the scheme’s conditions and other import/export regulations, which can result in delays and additional administrative costs.

The EPCG scheme is indeed beneficial for boosting exports and enhancing modernisation in Indian industries. However, businesses must carefully navigate the challenges of compliance, investment costs, and regulatory complexities to fully capitalise on its potential. By addressing these challenges, industries can enhance their global competitiveness and drive India’s economic growth in key sectors.