The Directorate General of Foreign Trade (DGFT) has issued a significant public circular providing relief under the EPCG Scheme for exporters affected by sectoral export decline during FY 2024–25. 

This update is issued in terms of Para 5.17(a) of the Foreign Trade Policy 2023 read with the relevant provisions of the Handbook of Procedures (HBP). 

What Is the Relief About? 

Under the EPCG (Export Promotion Capital Goods) Scheme, authorization holders are required to fulfill: 

• Specific Export Obligation (SEO) 
• Average Export Obligation (Average EO) 

As per Para 5.17 of HBP 2023, exporters are eligible for proportionate reduction in their Average EO if: 

The total exports of their sector/product group have declined by more than 5% compared to the previous financial year. 

For FY 2024–25, DGFT has now identified product groups that have witnessed such decline compared to FY 2023–24. The detailed list of affected sectors/product groups is provided in the Annexure to the circular. 

Who Is Eligible? 

Exporters holding EPCG Authorisations whose sector/product group: 

• Recorded more than 5% decline in exports in 2024–25 compared to 2023–24 
• Falls within the Annexure issued by DGFT 

Such exporters are entitled to proportionate reduction in their Annual Average EO for FY 2024–25. 

Directions to Regional Authorities 

The circular directs all Regional Authorities to: 

• Re-fix Annual Average EO for EPCG Authorisations for FY 2024–25. 
• Endorse the reduction (if applicable): 
• In the licence file of the Regional Authority 
• In the amendment sheet issued to the EPCG Authorisation holder 

This ensures procedural clarity and documentation alignment for exporters seeking EO discharge. 

Important Compliance Check Before EO Demand 

The circular further instructs Regional Offices that while processing: 

• EO discharge requests 
• Shortfall cases 
• Issuance of demand notices 
• Granting EODC (Export Obligation Discharge Certificate) 

Authorities must consider earlier policy circulars issued under: 

• Para 5.11.2 of HBP 2009–14 
• Para 5.19 of HBP 2015–20 
• Para 5.17 of FTP 2023 

This ensures exporters are not denied relief without proper policy consideration. 

Practical Implications for EPCG Authorisation Holders 

This relief is particularly relevant for sectors facing: 

• Global demand slowdown 
• Commodity price volatility 
• Supply chain disruptions 
• Regulatory or geopolitical trade impact 

Eligible exporters should: 

✔ Review whether their product group is listed in the Annexure 
✔ Assess Average EO computation for FY 2024–25 
✔ File appropriate representation, if required 
✔ Ensure proper endorsement in licence records 

Failure to review this update may result in avoidable compliance exposure during EO discharge or EODC processing. 

Why This Update Matters 

The EPCG Scheme is capital-intensive and non-fulfilment of EO may lead to: 

• Customs duty demand 
• Interest liability 
• Penalty proceedings 
• Blockage of future authorisations 

This relief mechanism provides a structured policy cushion to genuine exporters impacted by sectoral downturns. 

How Preface Venture Can Assist 

At Preface Venture, we support exporters with: 

• EPCG compliance review 
• EO re-calculation and representation 
• Sector eligibility assessment 
• EODC documentation support 
• Risk advisory before demand notice 

If your sector is covered in the Annexure, this is the right time to reassess your Average EO exposure. 

For the detailed Annexure and product-wise decline percentages, refer to our full update. Click Here

Notification Reference:  DGFT
Policy Circular No.10 | 2025-26
26/02/2026