DGFT Licenses — EPCG & Advance Authorization

For an Indian exporter, two DGFT schemes can change the unit economics of an entire factory: EPCG (Export Promotion Capital Goods), which lets you import capital goods at zero customs duty against an export obligation, and Advance Authorization (AA), which lets you import inputs duty-free for the manufacture of physical exports. Used correctly, both can save 15–28% of landed cost on imported machinery and inputs. Used incorrectly, they create a duty-plus-interest-plus-100%-penalty liability that crystallises 6 years later when the EODC reconciliation finally happens.

The framework is the Foreign Trade Policy (FTP) 2023, the Handbook of Procedures (HBP) 2023, the Customs Act for actual import, and a complex set of public notices that DGFT updates almost monthly. The portal is DGFT's iECGS (under the FTP 2023 architecture), with the application, EODC, redemption, invalidation, condonation and revalidation modules all online. ICEGATE handles the duty-free import side; DGFT handles the licence side; the two have to reconcile through the shipping bill, BRC, scrip ledger, and AA / EPCG redemption file — and they often don't, until someone makes them.

We run EPCG and Advance Authorization end-to-end — from application to EODC, including the awkward middle phase where most exporters fall behind on export obligation tracking.

EPCG — Capital Goods Duty-Free, Against Export Obligation

What you save: Zero BCD + zero IGST (under specified conditions) on import of capital goods used in producing exports. Effective saving 18–28% of landed cost depending on the equipment.

What you commit: Export obligation = 6 times duty saved, to be fulfilled in 6 years (with block-wise milestones — 50% in the first 4 years, 100% in 6 years).

What can go wrong: Missed EO, wrong product code, capital goods used in non-export production, EODC delay, second-hand goods import without DGFT permission, ITC not reversed where IGST exemption claimed.

Advance Authorization — Inputs Duty-Free for Physical Exports

What you save: BCD, IGST, anti-dumping, safeguard and other duties on imported inputs used in the manufacture of exports under fixed Standard Input-Output Norms (SION) or self-declared norms.

What you commit: Physical export of resultant product within 18 months (extendable) with positive value addition (typically 15%).

What can go wrong: Wrong SION, wastage above norm, mismatch between input quantity and resultant product, BRC reconciliation gaps, sale of duty-free inputs in the domestic market (offence under Section 111 / FTDR Act).

Other DGFT Workflows We Run

DFIA (Duty-Free Import Authorization), Status Holder Certificate, RCMC, IEC modification, MEIS / SEIS legacy claims, RoDTEP / RoSCTL (separately), EOU and SEZ-coordinated imports, Project Authority Certificate (PAC), invalidation letters for indigenous procurement, deemed export benefits, and condonation of EO shortfall through the Policy Relaxation Committee (PRC).

Why EODC Is Where the Money Is Won or Lost

The Export Obligation Discharge Certificate (EODC) is the document that closes the licence — without it the bond / BG remains live and customs can recover the saved duty with interest. Many companies hold dozens of un-redeemed licences from years past, each a contingent liability of crores. We run EODC reconciliation as a clean-up project: pull every shipping bill against every licence, file the redemption application with the correct attachments, and close out — bringing the BG back and the contingent liability off the books.