5.04 — Export obligation

Following conditions shall apply to the fulfillment of Export obligation:-

• (a) Export obligation shall be fulfilled by the Authorisation holder through export of goods which are manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted.

• (b) For export of goods, EPCG Authorisation holder may export either directly or through third party(ies).

• (c) EO under the scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any; except for categories mentioned in paragraph 5.12(a). Such average would be the arithmetic mean of export performance in the preceding three licensing years for same and similar products. The Average Export Obligation (AEO) shall be fulfilled every financial year, till export obligation is completed. Exports/supplies made over and above AEO shall only be considered for fulfillment of Export Obligation.

• (d) In case of indigenous sourcing of Capital Goods, specific EO shall be 25% less than the EO stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04(c).

• (e) Exports under Advance Authorisation, DFIA, Duty Drawback, RoSCTL and RoDTEP Schemes would also be eligible for fulfilment of EO under EPCG Scheme.

• (f) Export obligation may be fulfilled both by physical exports as well as deemed exports. Deemed export supplies shall also be eligible for benefits available under paragraph 7.03 of FTP.

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Export Promotion Capital Goods (EPCG) Scheme

• (g) Exports made from DTA units shall only be counted for calculation and/or fulfillment of AEO and/or EO.

• (h) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.

• (i) Royalty payments received by the Authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.

• (j) Payment received in rupee terms for such Services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG scheme.

• (k) Export proceeds realized in Indian Rupees as per para 2.52(d)(ii) are also counted towards fulfillment of export obligation.

• (l) Only one benefit specified in paras 5.04(d), 5.09, 5.10 and 5.11 shall be admissible.

• (m) Extension of EO period shall be permitted as prescribed in Handbook of Procedures.