Under Customs, Policy Circular No. 10/2025-26 dated 26.02.2026 is a significant compliance update for EPCG license holders.
Let's break it down into a structured, operational checklist for quick application in practice:
Compliance Checklist: EO Reduction under Para 5.17 (FTP 2023)
1. Eligibility
- Check if your sector/product group exports declined >5% in FY 2024-25 compared to FY 2023-24.
- If decline is continuous over consecutive years, use the year after which decline began as the base year.
2. DGFT Communication
- DGFT will notify Regional Authorities (RAs) of eligible sectors/product groups within 7 months of FY close.
- Refer to Policy Circular No. 10/2025-26 (26.02.2026) for the official list of product groups with decline percentages.
3. Action by Regional Authorities
- RAs will re-fix annual average EO proportionately for FY 2024-25.
- Reduction must be endorsed in:
- License file
- Amendment sheet issued to EPCG Authorisation holder
4. Exporter’s Responsibility
- Ensure EO reduction endorsement is reflected in your license records.
- While applying for EO discharge (EODC):
- Reference Para 5.11.2 (HBP 2009-14), Para 5.19 (HBP FTP 2015-20), and Para 5.17 (FTP 2023).
- Confirm RA considers these before issuing demand notice/EODC.
5. Risk Mitigation
- Maintain documentation of sector decline (DGFT circular + export data).
- Keep a check-sheet for EODC applications to ensure Para 5.17 relief is applied.
- If EO shortfall exists, rely on cumulative relief provisions across past FTPs.
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