Short answer: If you have not completed your Export Obligation (EO) under EPCG, do not ignore it. You can approach the Regional Authority (RA) for an extension, subject to the applicable composition fee. Another option is to regularise the shortfall by paying the applicable customs duty, taxes and cess in proportion to the shortfall, along with interest.
If you are facing an EPCG Export Obligation issue, EPCG export obligation consultants can help you review your Authorisation, assess the shortfall and identify the appropriate next steps.
Quick Facts
| Particular | Key Information |
|---|---|
| EPCG basics | |
| Export Obligation | You have to fulfil an EO equal to 6 times the duties, taxes and cess saved within 6 years from the date of issue of the Authorisation. You should complete 50% in the first 4 years and the balance in years 5 and 6 (FTP 2023, Para 5.01(b); HBP 2023, Para 5.13). |
| Sale or transfer of machinery | You cannot sell or transfer the imported machinery until the EODC is granted (FTP 2023, Para 5.03). |
| If your EO is not complete | |
| First 4-year block not complete | You can apply to the RA for an extension by paying the applicable composition fee. If the first block is not extended, customs duty and applicable interest on the unfulfilled EO may become payable in proportion to the shortfall (HBP 2023, Para 5.13(c)). |
| After 6 years | The RA may grant two extensions of 1 year each, or 2 years at one time, on payment of the appropriate composition fee. The EO period cannot be extended beyond 8 years from the date of issue (HBP 2023, Para 5.16(b), (c)). |
| You cannot complete the EO | You can regularise the shortfall by paying customs duty, taxes and cess in proportion to the shortfall, with interest (HBP 2023, Para 5.21(b), (e)). |
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What Should You Do?
- Check your Authorisation date and your EO status on the DGFT portal.
- If the block or EO period is still running, you can apply for an extension. If you cannot complete the EO, you can regularise the shortfall by paying duty and interest.
Example: ₹10 Lakh Machine, EO Not Completed
A manufacturer imported a machine with a CIF value of ₹10,00,000. Assume the machine qualifies for the applicable EPCG duty exemption.
| Particulars | Rate × Base | Amount |
|---|---|---|
| Basic Customs Duty | 7.5% × ₹10,00,000 | ₹75,000 |
| Social Welfare Surcharge | 10% × ₹75,000 | ₹7,500 |
| IGST | 18% × ₹10,82,500 (CIF + BCD + SWS) | ₹1,94,850 |
| Total duties, taxes and cess saved | ₹2,77,350 | |
| Export Obligation | 6 × ₹2,77,350 | ₹16,64,100 |
| First-block EO (50%) | 50% × ₹16,64,100 | ₹8,32,050 |
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Now look at the position at the end of the first block. In both cases, assume the Average Export Obligation (AEO) is met.
| Particulars | Calculation | Zero Exports | Some Exports |
|---|---|---|---|
| EO counted so far | – | ₹0 | ₹5,00,000 |
| Unfulfilled first-block EO | ₹8,32,050 − EO counted | ₹8,32,050 | ₹3,32,050 |
| Proportionate customs duty | Unfulfilled EO ÷ 6 (EO is 6 times the duty saved) | ₹1,38,675, plus applicable interest. | ₹55,342, plus applicable interest. |
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What Happens Next?
- Apply to the RA for the extension, or make the payment.
- Submit the EO report online and apply for the EODC in ANF 5B once the applicable EO is complete.
Latest Updates
- Public Notice No. 24/2024-25 dated 20 September 2024: The EO report is to be filed after the first 4-year block and thereafter during the valid EO period.
- Policy Circular No. 10/2025-26 dated 26 February 2026: DGFT gave Average Export Obligation relief for 2024-25 for certain specified product groups, subject to the conditions of the circular.
- Trade Notice No. 21/2026-27 dated 21 August 2026: DGFT introduced an automated facility for processing Export Obligation extension cases considered by the PRC/EPCG Committee.
Why Kireeti Group
Falling short on your EPCG Export Obligation becomes more difficult to manage when deadlines are missed. Kireeti Group can help you understand your position and take the right action at the right time.
- Review of your EO status, block dates and Average Export Obligation position.
- Assistance in working out the correct composition fee, duty and interest.
- Applications for extension and regularisation to the Regional Authority.
- Coordination with Customs and support through the full EPCG journey until the EODC.
EO running behind? Talk to Kireeti Group before the deadline arrives.
Get Expert Guidance Before Importing Capital Goods
Choosing the right route for importing capital goods requires careful consideration of your machinery requirements, eligibility and export plans. EPCG scheme consultants can help you understand the process, prepare the necessary documentation and identify important compliance obligations before proceeding.
Contact Kireeti Consultants to discuss your capital goods import plans and determine whether the EPCG Scheme may be suitable for your business.
Official Sources
- Foreign Trade Policy 2023.
- Handbook of Procedures 2023.
- DGFT Public Notice No. 24/2024-25 dated 20.09.2024.
- DGFT Policy Circular No. 10/2025-26 dated 26.02.2026.
- DGFT Trade Notice No. 21/2026-27 dated 21.08.2026.
