Import under EPCG

Hi Mahesh,

Here’s a clear explanation based on the EPCG scheme and FTP guidelines:

1) Can export of drugs (manufactured without using EPCG-imported machine) packed in bags made by the EPCG-imported packaging machine be considered for EO fulfillment?

No, the Export Obligation (EO) under EPCG must be fulfilled by exporting products manufactured or produced using the imported capital goods.

• Since the drugs are manufactured without using the EPCG-imported packaging machine, their export cannot be counted towards the EO.

• Just packing drugs in bags made by the EPCG machine does not qualify as manufacturing or producing that product by the imported capital goods.

2) Which items count for fulfilling EO — bags or drugs?

• The bags manufactured by the EPCG-imported packaging machine are considered as the product made from the imported capital goods.

• So, exporting those bags can be counted towards EO.

• The drugs, although exported, do not count if they are manufactured without using the EPCG-imported machine.

Summary:

Additional tip:
If packaging only involves sealing or packing without any substantial manufacturing, sometimes EO fulfillment is tricky. I suggest clarifying this with DGFT or a trade consultant based on exact machine use and product process.