EPCG – Extension

EPCG Export Obligation Extension Services by BEST EXIM

The Export Promotion Capital Goods (EPCG) Scheme is one of the most beneficial initiatives under India’s Foreign Trade Policy (FTP). It enables exporters to import or procure capital goods at zero customs duty, provided they commit to fulfilling a fixed export obligation within a specified time period.

However, in some cases, exporters face genuine challenges in meeting the export obligation within the prescribed 6-year period. For such cases, the Directorate General of Foreign Trade (DGFT) allows EPCG Extension — an official process to extend the export obligation period by valid justification and payment of applicable composition fees.

At BEST EXIM and Industrial Services, we provide end-to-end support to help exporters smoothly obtain EPCG License Extension without delays or compliance issues.

What is EPCG Extension?

Every EPCG authorization holder must complete the export obligation (EO) within 6 years from the date of issue of the license. The EO requires the exporter to earn foreign exchange equivalent to 6 times the duty saved on the imported or domestically procured capital goods.

If an exporter is unable to meet this EO within the validity period due to unavoidable reasons — such as market slowdown, delay in machinery installation, or production constraints — the exporter can apply to DGFT for extension of the EO period.

This process is officially known as “EPCG Export Obligation Period Extension.”

Eligibility for EPCG Export Obligation Extension

The following categories are eligible to apply for an EPCG extension:

Manufacturer Exporters holding valid EPCG authorization.
Merchant Exporters tied with supporting manufacturers.
Service Providers who have imported machinery under the EPCG Scheme.
Common Service Providers (CSPs) under DGFT-approved sectors.

However, only those who have installed and operationalized the machinery are eligible to request an extension.

Time Frame and Validity

Initial EO Period: 6 years from the date of issue of authorization.
First Extension: Allowed for 2 additional years with valid justification and payment of applicable fees.
Second Extension: May be granted for another 2 years in exceptional cases, subject to DGFT’s discretion and valid grounds.
Maximum Total Period: Normally, an EPCG authorization cannot exceed 10 years including extensions.

Grounds for Seeking Extension

Exporters can apply for an EPCG extension under valid and justifiable reasons, such as:

Delay in machinery installation or commissioning due to technical or site issues.
Market fluctuations or global demand slowdown affecting exports.
Pandemic or force majeure situations beyond the exporter’s control.
Change in product line or shift in production strategy requiring more time.
Delay in obtaining mandatory government or environmental clearances.

Each reason must be supported with documents such as Chartered Engineer certificates, production records, and correspondence proof.

Procedure for Applying EPCG Extension

Prepare Application Online:
Log in to the DGFT portal and select the option for “EPCG Export Obligation Extension.”
Attach Supporting Documents:
- Copy of EPCG authorization.
- Detailed justification letter.
- Installation certificate.
- Export details till date (if partial EO fulfilled).
- Chartered Accountant and Chartered Engineer certificates.
Payment of Composition Fee:
A composition fee of 2% on the unfulfilled EO value is applicable for the first extension. For further extension, DGFT may charge higher fees depending on the delay and reason.
DGFT Review and Approval:
DGFT reviews the request, verifies compliance with earlier conditions, and grants approval via amendment of EPCG authorization.
Updated EO Period:
Once approved, the extended EO period is reflected in the authorization and DGFT records.

Late Application or Non-Compliance

If an exporter fails to apply within the EO validity period, DGFT may still consider the extension with payment of additional late fees. However, in case of non-fulfillment even after the extension, the exporter becomes liable to:

Pay customs duty plus interest on unfulfilled EO.
Lose EPCG status benefits and may be blacklisted under DGFT records.
Face challenges in getting future authorizations.

Hence, timely filing of the extension is essential to avoid penalties.

Benefits of EPCG Extension

Avoids Penalty and Duty Reversal: Prevents customs demand and DGFT action.
Allows More Time for Exports: Ensures exporters can achieve EO peacefully.
Protects DGFT Compliance Record: Maintains good standing for future licenses.
Keeps Capital Goods Duty-Free: No need to repay saved duties if EO is completed within extended time.
Facilitates Business Continuity: Provides flexibility to manage export timelines effectively.

How BEST EXIM and Industrial Services Helps

BEST EXIM and Industrial Services has years of expertise in handling EPCG-related DGFT procedures, including:

EO extension filings.
Clarification replies to DGFT queries.
Calculation of composition fees.
Documentation verification and error-free submission.
Representations before DGFT officers for special consideration.
Final EO closure and redemption services.

Our professional team ensures that all extension cases are handled smoothly, with full compliance and transparency. We keep our clients informed about every DGFT update and legal change under FTP or Public Notices.

Important DGFT Guidelines (as per latest FTP)

No extension is granted if the exporter has not installed the machinery.
Extension applications must be filed before expiry of the EO period.
DGFT considers genuine reasons only — not commercial decisions.
In special cases like force majeure, DGFT may waive composition fees.
After extension, exporters must maintain proper export proof, shipping bills, and eBRCs.

Conclusion

The EPCG Extension process is a valuable relief mechanism for exporters who face challenges in completing their export obligations. By obtaining a valid extension, they can continue enjoying customs duty exemptions and maintain DGFT compliance.

With expert guidance from BEST EXIM and Industrial Services, exporters can ensure smooth, timely, and legally correct EPCG extension approvals — minimizing risks and safeguarding export benefits.

BEST EXIM and Industrial Services – Your trusted DGFT partner for EPCG License, Extension, and Export Compliance Management.

Best Exim and Industrial Consultants, at the forefront of global trade, is committed to easing the complexities of international business and providing specialized services in subsidies, customs procedures, and GST compliance