Quick Summary
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.
The Export Obligation (EO) for EPCG licenses can be reduced proportionately for FY 2024-25 under Policy Circular No. 10/2025-26.
Eligibility is for sectors or product groups whose exports declined by more than 5% in FY 2024-25 compared to FY 2023-24.
The DGFT will notify Regional Authorities (RAs) of eligible sectors/product groups within 7 months of the fiscal year close, referencing Policy Circular No. 10/2025-26.
Regional Authorities will re-fix the annual average EO proportionately for FY 2024-25 and endorse this reduction on the license file and amendment sheet.
Exporters must ensure the EO reduction endorsement is reflected in their license records and confirm that the RA considers these provisions before issuing demand notices or Export Obligation Discharge (EODC).
Exporters should maintain documentation of sector decline, including the DGFT circular and their own export data, and use a check-sheet for EODC applications to ensure the Para 5.17 relief is applied.
CAclubindia
