Import under EPCG

We are manufacturer of Pharma products.We are planning to import a Packaging machine under EPCG.The machine will make Bag and Seal the bag after filling the Drugs manufactured by us.As per provision of the Foreign Trade Policy (FTP) if any Capital goods is imported under EPCG Export Obligation (EO)is to be fulfilled by exporting the Product manufactured / produced from the Machine (Capital goods) cleared under EPCG licence.

Now, my questions are as under:

1)For Fulfillment of EO Can we consider export of Drugs manufactured by us but not manufactured from macinery NOT imported under ANY EPCG licence and filled in the BAG manufactured from the machine imported under EPCG licence?

If not then.

2) Which item can be said to be exported towards fulfillment of EO BAGs which manufacutered from the machine imported under EPCG licence or Drugs manufactured by us but not manufactured from the machine Imported under ANY EPCG licence?

Please reply as early as possible.

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:

Exported Product	Counts Towards EO?
Drugs (not manufactured using EPCG machine)	No
Bags manufactured using EPCG-imported machine	Yes

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.