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Sections of the media have reported that the Export Promotion Capital Goods (EPCG) scheme might be abolished when the Goods and Services Tax (GST) laws take effect. Normally, I wouldn’t give importance to such reports. However, the commerce ministry did recently take up this issue for discussion at senior levels. It was based on a study on the impact of imports under the EPCG scheme on India’s export and its capital goods sector, by the Centre for WTO Studies in August 2015.
The EPCG scheme allows import of capital goods, including spares for pre-production, production and post-production, at zero duty. This is subject to an export obligation of six times the duty saved, to be fulfiled in six years. The scheme