IGCR vs EPCG Scheme: Key Differences Explained

IGCR vs EPCG is a comparison of two duty-reduction schemes that target different goods and impose different obligations. IGCR is a customs concession for inputs and goods put to a declared end use, with no export commitment. EPCG, the Export Promotion Capital Goods scheme, allows duty-free or concessional import of capital goods on the condition that you meet an export obligation linked to the duty saved. The simplest way to separate them: IGCR is usually about inputs and consumption for any eligible use, while EPCG is about capital goods financed by a promise to export.

What Each Scheme is Really For

EPCG exists to help exporters modernise. It lets you import machinery and capital goods at concessional duty so you can produce export goods, and in return you commit to exporting a multiple of the duty saved within a fixed period. It is a DGFT scheme under the Foreign Trade Policy.

IGCR exists to lower input costs for domestic production and eligible services. It operates under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 through customs and ICEGATE, and its condition is genuine end use rather than export.

IGCR vs EPCG: The Differences That Matter Most

• Type of goods: EPCG is centred on capital goods and machinery. IGCR is most often used for raw materials, components, and inputs, though it can cover capital goods where a notification allows.
• Export obligation: EPCG carries a specific export obligation equal to six times the duties, taxes and cess saved on the capital goods, to be fulfilled within six years of the authorisation. IGCR carries no export obligation at all.
• Administering authority: EPCG is DGFT. IGCR is customs and CBIC.
• What you must prove: EPCG requires proof of exports to discharge the obligation. IGCR requires proof of end-use consumption.
• Time horizon: EPCG obligations run over years. IGCR requires use of goods within the shorter period a notification allows.
• Consequence of failure: EPCG shortfall means paying proportionate duty and interest on the unfulfilled obligation. IGCR non-compliance means the differential duty on diverted or unused goods becomes recoverable.

When IGCR Fits Better

If you are importing inputs to make goods for the domestic market, or capital goods with no intention to build an export obligation around them, IGCR is the cleaner route. It avoids committing your business to years of export targets and keeps compliance focused on consumption records you already keep. For domestic-focused manufacturers, IGCR removes a risk EPCG would add.

When EPCG Fits Better

If you are an exporter investing in capital goods to expand export production, EPCG is designed for exactly that. The duty relief on machinery can be substantial, and if your export pipeline is strong, meeting the obligation of six times the duty saved over six years is realistic. The scheme rewards businesses that were going to export anyway and need to import equipment to do it.

Choosing Between Them

The IGCR vs EPCG decision usually follows naturally from what you are importing and where your output goes, because the two schemes cover different goods and pull in different directions on export commitment. Problems arise when a business takes on an EPCG obligation it cannot meet, or misses an IGCR concession it was entitled to. Our team helps match the scheme to your actual trade profile. See the IGCR clearance service or contact [email protected] or +91 91673 79073.

IGCR runs through customs on ICEGATE; EPCG is administered by the DGFT under the Foreign Trade Policy.

Frequently Asked Questions

Q1. What is the main difference between IGCR and EPCG?

The main IGCR vs EPCG difference is scope: IGCR covers inputs and goods for a declared end use with no export obligation, while EPCG covers capital goods against an export obligation.

Q2. What is the EPCG export obligation?

EPCG requires exports equal to six times the duties, taxes and cess saved on the capital goods, fulfilled within six years of authorisation.

Q3. Does IGCR cover capital goods?

It can, where a notification allows, but IGCR is most often used for raw materials, components, and inputs.

Q4. Which scheme has no export commitment?

IGCR. It carries no export obligation at all, making it suited to domestic-focused importers.

Q5. Which scheme suits an exporter buying machinery?

EPCG, which is designed for importing capital goods at concessional duty against an export obligation.