AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYYes
Tax-based export incentive
As of 5 June 2012, the government of India has introduced the Post Export Promotion Capital Goods (EPCG) scheme as part of its Foreign Trade Policy (2009-14).
The original EPCG scheme allows the import of capital goods at reduced or zero customs duties when used in the manufacture of export goods. To receive the benefit of lower duties, the importer has to fulfill certain export obligations. In the original EPCG, this duty reduction was provided ex ante i.e. immediately at the point of entry of the imported good.
Under the Post EPCG scheme the importer only receives the rebate ex post i.e. after he has fulfilled the export obilgations. The importer can thus choose to fulfill the export obligation and get a duty remission scrips of a value proportionate to the import duty paid. These scrips are freely transferable and can be used to set off payables to the government.
Capital goods under this scheme include all capital goods for production, pre/post-production, spares, tools, fixtures, etc. In case the capital goods are sourced domestically, excise duty exemption is available provided the stated export obligations are met,
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