Manufacturing companies importing raw materials, components, and capital machinery into India have access to several duty exemption and reduction schemes. The key is knowing which scheme applies to your situation — Project Import, EPCG, Advance Authorization, or 100% EOU — so you don't overpay duty on every shipment.
Key Import Schemes for Manufacturers
| Scheme | Who Benefits | Duty Benefit |
|---|---|---|
| EPCG (Export Promotion Capital Goods) | Exporters importing capital goods | 0% BCD on capital goods against export obligation |
| Advance Authorization | Exporters importing inputs for export production | 0% duty on inputs; standard IGST (refundable) |
| 100% EOU / EHTP / STP | Export-oriented units | Duty-free imports; IGST on DTA sales |
| Project Import (Heading 9801) | Greenfield / expansion projects | Concessional 7.5% BCD on all project machinery |
| SEZ Unit | Special Economic Zone units | Duty-free imports; operates in customs-bonded area |
Capital Goods Import Duty
| Category | Normal BCD | EPCG BCD | IGST |
|---|---|---|---|
| General machinery (HS 84) | 7.5% | 0% | 18% |
| Electrical equipment (HS 85) | 7.5–15% | 0% | 18% |
| Instruments (HS 90) | 0–10% | 0% | 18% |
| Under Project Import 9801 | 7.5% (concessional) | N/A | 18% |
Project Import — How It Works
Project Import (Customs Heading 9801) allows a manufacturing project's entire plant and machinery to be assessed at a flat 7.5% BCD regardless of individual machine HS codes that might be higher. Requirements:
- File a Project Import Application with the Principal Commissioner of Customs
- All machinery must be for a new industrial project or substantial expansion
- A single consolidated bill of entry can cover all machines in the project
- Ongoing spare parts imported separately: standard HS code rates apply
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Frequently asked questions
Under EPCG scheme: 0% BCD on capital goods against an export obligation (typically 6x the duty saved over 6 years). Apply for EPCG Authorization from DGFT before the import.
Project Import (HS 9801) allows all plant and machinery for a new industrial project to be assessed at a flat 7.5% BCD, regardless of each machine's individual HS code rate. Requires prior approval from the Customs Commissioner.