India eases export obligation under EPCG, textiles to get relief

The Government of India has relaxed and provided relief in the average export obligation (EO) under the Export Promotion Capital Goods (EPCG) scheme for those sectors where total exports in that sector/product group has declined by more than 5 per cent in compared to the previous year.

In the textile-apparel sector, several products under chapters 60, 61 and 62 have recorded decline of more than 5 per cent in 2023-24 over the previous year.

The Government of India has eased export obligations under the EPCG scheme for sectors where exports declined by over 5 per cent in 2023-24.
Textile products under chapters 60, 61, and 62 saw a drop of up to 93 per cent, prompting relief for exporters.
A DGFT circular directs regional authorities to re-fix annual EO.
Regional offices must review policy circulars before issuing demand notices.

EPCG scheme is a programme that allows exporters to import capital goods at a reduced customs duty rate. The scheme’s goal is to help India’s manufacturing industry become more competitive by making it easier to import capital goods for production. Under the scheme, exporters have export obligations to meet out in the following years.

According to the circular issued by the Director General of Foreign Trade (DGFT) on January 21, 2025, all regional authorities have to re-fix annual average export obligations for EPCG authorisations for the year 2023-24 accordingly. The circular has been sent to DGFT’s regional offices and customs authorities

Regional offices, while considering requests of reduction in the obligation, will ensure that in case of shortfall in EO fulfilment, policy circulars issued earlier should also be considered before issuance of demand notice.

Textile fibre, fabric and garments under the certain chapters had witnessed fall up to 93 per cent in fiscal 2023-24 over the fiscal 2022-23. Therefore, textile exporters will also get relief by the decision.

Fibre2Fashion News Desk (KUL)

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