5.5

Export Obligation (EO)

Following conditions shall apply to the fulfilment of the EO:-

(a) EO shall be fulfilled by export of goods manufactured / services rendered by the applicant.

(b) 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 5.7.6 of HBP Vol. I. Such average would be the arithmetic mean of export performance in the preceding three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years.

(c) In case of indigenous sourcing of Capital Goods, specific EO shall be 10% less than the EO stipulated in Para 5.1 above.

(d) Shipments under Advance Authorization, DFRC, DFIA, or Drawback scheme, or incentive schemes under Chapter 3 of FTP; would also count for fulfilment of EO under EPCG Scheme.

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

(f) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), & (j) of FTP shall also be counted towards fulfilment of export obligation, alongwith usual benefits available under paragraph 8.3 of FTP.

(g) Royalty payments received by the Authorization Holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.

(h) Payment received in rupee terms for port handling services, in terms of Chapter 9 of FTP shall also be counted for EO discharge.

(This version of Chapter 5 of the Foreign Trade Policy deals with policy provisions for Export Promotion Capital Goods (EPCG) Scheme replace by NOTIFICATION NO. 01/2013, DT. 18/04/2013 with immediate effect.)

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5.5

Export Obligation (EO)

Following conditions shall apply to the fulfillment of the EO:-

(a) EO shall be fulfilled by export of goods manufactured / services rendered by the applicant.

(b) EO under the scheme shall be, over and above, the average level of exports achieved by him 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 5.7.6 of HBP Vol. I. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years.

(c) Upto 50% EO may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm / company, or group company / managed hotel, which has the EPCG authorization. However, EPCG authorizations issued prior to 01.04.2008 will be governed by earlier policy provisions.

(d) However, in such cases, additional export obligation imposed shall be over and above average exports achieved by the unit / company / group company / managed hotel in preceding three years for both the original and the substitute product(s) / service(s), despite exemptions in Para 5.7.6 of HBP v1.

(e) Shipments under Advance Authorization, DFRC, DFIA, or Drawback scheme, or incentive schemes under Chapter 3 of FTP; would also count for fulfillment of EPCG EO.

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

(g) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of FTP shall also be counted towards fulfillment of export obligation, alongwith usual benefits available under paragraph 8.3 of FTP.

(h) Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG. Payment received in rupee terms for port handling services, in terms of Chapter 9 of FTP shall also be counted for EO discharge. ]