Age bar on second hand CGs for import relief set to go

NEW DELHI: The forthcoming foreign trade policy is likely to allow import of second hand capital goods under the EPCG scheme without any cap on the age of the capital goods. Currently, import of second hand capital goods up to 10-years old are allowed under the EPCG scheme under concessional duty of 5%. This is expected to give a further boost to capital investments in the economy. â€œManufacturing needs to be given a big boost to aggressively tap the countryâ€™s extant and emerging export potential in key sectors. The EPCG scheme can be a major facilitator for new investment in the manufacturing sector. By allowing import of second hand machines of any age, the scheme could be more broadbased,â€� a senior commerce department official said. Imports under the EPCG scheme without any cap on the age of the machines have been a long-pending demand of exporters. Particularly, exporters from the SMEs sector were hamstrung by the stipulation about the age of the machines, imported through the concessional duty window. The government reckons that the relaxation of the EPCG condition would incentivise investment in critical manufacturing sectors like textiles and chemicals, as also the SMEs sector. Import duty on a large number of capital goods for many investment-prone sectors like cotton and man-made textiles have been brought down to 5% in last couple of years (outside the EPCG). A number of mainstream textile processing and garmenting machines were added to the concessional duty list in recent budget too. EPCG scheme allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at 5% customs duty subject to an export obligation equivalent to eight times of duty saved on capital goods imported under the scheme. The obligation is meant to be fulfilled over a period of eight years reckoned from the date of issuance of the licence. The export obligation is fixed over and above the average level of the firmâ€™s exports of the same/similar products, during the preceding three licensing years. The government reckons the broadening of the EPG scheme would do well to manufacturing sector, along with a slew of steps being taken to encourage investment. These steps include concessional finance proposed for new investments in SSI sector under the SSI Fund mooted by the NDA government, besides soft loans available to textile sector under the Technology Upgradation Fund Scheme. A soft loan scheme for plastic manufacturing sector too is under active consideration of the government.

Age bar on second hand CGs for import relief set to go

The forthcoming foreign trade policy is likely to allow import of second hand capital goods under the EPCG scheme without any cap on the age of the capital goods.

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