DGFT Announces Average Export Obligation Relaxation for EPCG Authorization Holders Facing Sector-Specific Export Decline in 2024-25
The Directorate General of Foreign Trade (DGFT) has released comprehensive instructions regarding relaxation in Average Export Obligation (EO) applicable to authorizations issued under the Export Promotion Capital Goods (EPCG) Scheme. Through Policy Circular No. 10/2025-26 issued on February 26, 2026, the trade regulatory authority has operationalized the relief mechanism outlined in Para 5.17(a) of the Handbook of Procedures (HBP) of FTP, 2023, providing much-needed respite to exporters operating in sectors that experienced significant contraction during the financial year 2024-25.
Framework for Export Obligation Relief Under Para 5.17(a) of HBP
The provisions contained in Para 5.17 of the HBP of the FTP, 2023 establish a structured framework designed to extend support to exporters functioning in industries or product categories where aggregate exports have witnessed a downturn exceeding the threshold of 5% when measured against the preceding financial year. Under this mechanism, the Average Export Obligation applicable to the affected year may be proportionately reduced in alignment with the actual decline recorded in exports within the specific sector or product group during the relevant period compared to the year immediately preceding it.
This regulatory provision specifically targets those sectors and product groups that demonstrated such decline during 2024-25 relative to 2023-24, thereby qualifying them for the proportionate relief in their export obligation commitments under the EPCG Scheme.
Sectoral Export Performance Analysis and Eligible Product Groups
The DGFT has conducted a comprehensive analysis of export performance across various sectors and product groups for the financial year 2024-25 in comparison with 2023-24. Based on this detailed assessment, the directorate has prepared and annexed a complete list identifying specific product groups that experienced export decline exceeding the prescribed 5% threshold during this period. The annexed list clearly indicates the percentage decline recorded for each eligible product group, providing transparency and clarity to both exporters and regional authorities tasked with implementing this relief measure.
This data-driven approach ensures that only genuinely affected sectors receive the benefit of reduced export obligations, maintaining the integrity of the EPCG Scheme while providing targeted support where it is most needed.
Operational Directives to Regional Authorities
The policy circular contains specific operational instructions directed at all Regional Authorities of DGFT across the country. These authorities have been mandated to undertake a systematic review and re-fixation of the Annual Average Export Obligation applicable to EPCG Authorizations pertaining to the year 2024-25. This recalibration exercise must be conducted in accordance with the sector-specific decline percentages provided in the annexed list.
Documentation and Endorsement Requirements
Regional Authorities must ensure proper documentation of any reduction granted in export obligations. Specifically, they are required to:
- Appropriately record the reduction in the official licence file maintained at the office of the Regional Authority
- Issue formal amendment sheets to EPCG Authorisation holders reflecting the revised export obligation figures
- Maintain accurate records of the proportionate reduction calculations for audit and verification purposes
- Update their internal systems to reflect the modified export obligation commitments
This documentation protocol ensures transparency in the implementation process and provides exporters with official confirmation of their revised obligations.