The following conditions shall apply to the fulfillment of the export obligation:
- The export obligation shall be fulfilled by the export of goods manufactured or produced by the use of the capital goods imported under the scheme. The export obligation may also be fulfilled by the export of same goods, for which EPCG licence has been obtained, manufactured or produced in different manufacturing units of the licence holder/ specified supporting manufacturer(s)/vendor(s).
However, if exporter is processing further to add value on the goods so manufactured, the export obligation shall stand enhanced by 50%.
- The exports shall be direct exports in the name of the EPCG licence holder. However, the export through third party(s) is also allowed provided the name of the EPCG Licence holder is also indicated on the shipping bill. If a merchant exporter is the importer, the name of the supporting manufacturer shall also be indicated on the shipping bills. At the time of export, the EPCG licence No. and date shall be endorsed on the shipping bills which are proposed to be presented towards discharge of export obligation.
- Export proceeds shall be realised in freely convertible currency except for deemed exports under paragraph 6.5(iv). However, in case of exports against irrevocable letter of credit in free foreign exchange, realisation of export proceeds need not be insisted for fulfillment of export obligation.
- Exports shall be physical exports. However, deemed exports as specified in paragraph 10.2 (a), (b), (d), (f), and (g) of Policy shall also be counted towards fulfillment of export obligation, but the EPCG licence holder shall not be entitled to claim any benefit under paragraph 10.3 of this Policy in respect of such deemed exports. The supplies made to the Oil and Gas sector may be counted towards discharge of export obligation against an EPCG licence provided the licence has been issued on or before 31.3.2000 and no benefit under paragraph 10.3 of the Policy has been claimed on such supplies.
- The export obligation under the scheme shall be, in addition to any other export obligation undertaken by the importer, except the export obligation for the same product as defined in paragraph 6.5(vi) below. The export obligation under the scheme, shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products. Wherever the average level of export was fixed taking into account the exports made to such countries as are notified by the DGFT from time to time for this purpose, the average level of exports shall be reduced by excluding exports made to these countries. This waiver shall be applicable to all EPCG licences which have not been redeemed/ regularised.
However, exports made against any EPCG licence, except the EPCG licences, which have been redeemed, shall not be added up for calculating the average export performance for the purpose of the subsequent EPCG licence. If the exporter achieves an export of 75% of the annual value of the production of the relevant export product, the export obligation against the EPCG licence shall be subsumed under that export, provided the aggregate value of such exports during the specified period shall not be less than the aggregate value of the export obligation fixed under paragraph 6.2 of this Policy.
- Where the manufacturer exporter has obtained licences for the manufacture of the same export product both under EPCG and the Duty Exemption or Diamond Imprest Licence Scheme or made exports under DEPB/DFRC/ replenishment licences, the physical exports made under these Schemes shall also be counted towards the discharge of the export obligation under EPCG scheme.
- In case of export of computer software, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture, the export obligation shall be determined in accordance with paragraph 6.2 of the Policy, but the licence holder shall not be required to maintain the average level of exports as specified in sub- paragraph (v) above.