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DGFT grants relief in average export obligation under EPCG Scheme
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Shardul Nautiyal, Mumbai
January 29 , 2025
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The Directorate General of Foreign Trade (DGFT) has issued a notification granting relief to exporters under the Export Promotion Capital Goods (EPCG) Scheme by reducing the Average Export Obligation (EO) for the year 2023-24. This relief has been introduced in accordance with Para 5.17 of the Hand Book of Procedures (HBP) of the Foreign Trade Policy (FTP) 2023 and is specifically targeted at pharma exporters where total exports have declined by more than 5% compared to the previous financial year (2022-23).
The objective of this provision is to support pharma exporters operating in struggling sectors by proportionally reducing their average EO requirements. This measure is expected to ease the compliance burden on businesses that have faced a downturn in global demand or other adverse conditions impacting their export performance.
A detailed list of product groups that have recorded a decline of more than 5% in exports during 2023-24 compared to 2022-23 has been specified in this notification.
Regional authorities (RAs) are directed to re-calculate and re-fix the annual average EO for EPCG authorizations for 2023-24 based on the decline data.
Any reductions must be properly recorded in the license file of the respective RA and formally endorsed in the amendment sheet issued to EPCG authorization holders.
Regional offices processing EO discharge requests must take into account any shortfalls in EO fulfillment in alignment with previous policy circulars. These considerations should be explicitly noted in the check-sheet for the Endorsement of Discharge Certificate (EODC).
All demand notices, EODC issuances, or related enforcement decisions must incorporate the relief measures specified in this notification to ensure that exporters receive the intended benefits.
Product groups experiencing more than 5% export decline in 2023-24 vs. 2022-23) are sulphuric acid, nitric acid, sulphonitric acids, diphosphorus pentaoxide, phosphoric acid, polyphosphoric acids, boric acids, ammonia, anhydrous or in aqueous solution, sodium hydroxide (caustic soda); potassium hydroxide (caustic potash); peroxides of sodium or potassium, zinc oxide, zinc peroxide, fluorides, fluorosilicates, fluoroaluminates, and other complex fluorine salts, chlorides, chloride oxides, and chloride hydroxides, bromides and bromide oxides; iodides and iodide oxides, hypochlorites, commercial calcium hypochlorites, chlorites, hypobromites, dithionites and sulphoxylates, sulphates, alums, peroxosulphates (persulphates), nitrites, nitrates, phosphinates (hypophosphites), phosphonates (phosphites), and phosphates, borates, peroxoborates (perborates), radioactive chemical elements and radioactive isotopes (including fissile/fertile chemical elements and isotopes) and their compounds among others.
This relief measure under the EPCG Scheme is a crucial step in ensuring that exporters receive the necessary support to mitigate the impact of declining exports. By reducing compliance burdens and facilitating EO fulfillment, the DGFT aims to bolster India’s foreign trade resilience and encourage sustained economic growth in export-oriented industries.
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